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The pound's losses continued
The UK inflation rate fell to 6.8% in July, from 7.9% in June and matching market expectations as energy prices eased. The core rate remained at 6.9% and consumer prices fell by 0.4%, the first decline since January.
The pound made gains of 0.3% against both the euro and US dollar yesterday and its strength has continued this morning following UK inflation results. The pound’s weekly performance is +0.28% against the euro and -0.28% against the US dollar.
Average wages in the UK (excluding bonus) increased 7.8% year-on-year to £613 per week in the second quarter of 2023. This is the most on record and surpassed market expectations of 7.4%. It’s believed these wages were boosted by a one-off payment to NHS workers.
Both European and London stocks suffered losses yesterday. The DAX lost 0.9%, the Stoxx fell 1% and the FTSE 100 retreated 1.6% to 7,390 on Tuesday, the lowest in five weeks after wage data raised expectations the BoE needs to keep rates higher for longer.
The boss of Harvey Nichols, Manju Malhotra, quit the retailer yesterday amid ongoing tensions over its strategy, having spent 25 years with the company. It’s believed that a member of the retailer’s owning family will take the reins.
In North America, the Canadian inflation rate rose to 3.3% in July from 2.8% in June.
Speaking of inflation, the Russian central bank hiked interest rates to 12% from 8.5% in an emergency move as the rouble dropped to its weakest point in almost 17 months.
Looking at the rouble’s annual performance amid the ongoing conflict in Ukraine, it has weakened by 26% against the US dollar and a lost a whopping 65% against the pound.
The German economic sentiment index was -12.3 in August, above expectations of -15 and from July’s -14.7.
US retail sales were up 0.7% month-over-month in July, marking a fourth consecutive rise, and exceeding market expectations of a 0.4% increase. This follows a 0.3% gain in June and was likely boosted by Amazon Prime Day as non-store retailers recorded the largest increase of 1.9%.
Later today, US economists will receive the latest building permits figures which are expected to come in at 1.457 million in July from 1.441 million in June.
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GBP: UK inflation falls to 6.8%
UK inflation has dropped to the lowest level since February 2022, following cuts in energy price caps, however a London think tank, the IPPR, fears the UK faces a “high” risk of recession.
GBP/USD: the past year
EUR: Danish brewer toasts profits
Danish brewer, Carlsberg, raised its expected profit growth to be between 4% and 7% this year after a “solid business performance” in the first half of 2023. The company revealed volumes grew 0.8% organically between January and June, while sales grew 11%. It is due to publish its results later today.
USD: US homebuilder sentiment falls
The NAHB/Wells Fargo housing market index in the US fell unexpectedly to 50 in August, from 56 in July, which was the highest reading since June last year.
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