Spreadex Market Update

UK inflation set to edge closer to 2% BoE target



After nibbling on some gristly figures across the last week and a bit the markets finally get a juicy data-steak to chow down on this Tuesday.

The undoubted focus this morning is on the UK’s latest inflation reading. The figure is expected to come in at 1.9%, a smidge below the Bank of England’s long-held 2% target. However, it could well cross that marker, as in 5 of the past 7 months the CPI has beaten forecasts by around 0.1%. Despite itself being the cause of inflation’s climb, the pound seems pretty pleased at the prospect of that aforementioned target being hit, namely because it increases the chances of the Bank of England rate hike.

"Part of the UK index’s morning slump stems from Rolls-Royce, which posted the largest loss in its history"

Sterling does appear a bit tentative at the moment, though yesterday it managed to cross 1.18 against the euro while holding strong above 1.25 against a Trump-boosted dollar. As for the FTSE, it has shed a decent chunk of Monday’s US-inspired rise after falling half a percent, a rise that was incidentally not as fruitful as it could have been specifically because of the pound’s gains. Part of the UK index’s morning slump stems from Rolls-Royce, which posted the largest loss in its history – a whopping £4.6 billion – after settling bribery and corruption charges.

Over in the Eurozone the DAX and CAC have got their own data to deal with, namely the ZEW economic sentiment readings and the region-wide flash GDP figure. The terms of the former, the German and Eurozone-wide numbers are set to drop to 15.1 and 22.3 respectively; as for GDP, analysts are forecasting the same 0.5% posted in the preliminary reading, though that may be undermined by the weaker than estimated German growth figure seen earlier this morning.

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