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The pound continues to weaken against the euro following yesterday’s inflation data. Inflation is now more than 5 times higher than the BoE’s target.
Against the dollar, sterling has also weakened.
In UK politics, both Tory leadership candidates have vowed to cut taxes. Liz Truss has pledged to scrap April’s National Insurance in efforts to help households and has also vowed to scrap a planned rise in corporation tax. Truss says high taxes are “choking off growth” in Britain’s economy.
Rishi Sunak has vowed to lower VAT on domestic energy bills from 5% to 0, as well as promising a reduction on income tax by 3p come late 2029. However, Sunak emphasized these tax cuts will only happen once Britain has “gripped inflation”.
The IFS said it was concerned by both candidates’ tax cut plans, due to the economy’s “deteriorating outlook”.
In the eurozone, inflation is predicted to hit 8.9% this morning.
In the US, data on existing home sales will be released today. In June, home sales plunged well under market forecasts to $5.12 million. Markets are predicting sales will decline further, to an even lower $4.8 million.
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GBP: Will Tory tax cut plans help sterling regain strength?
The pound continues to weaken against the euro following yesterday’s inflation data. Inflation is now more than 5 times higher than the BoE’s target. Against the dollar, sterling has also weakened.
Tory leadership candidate Liz Truss has pledged to scrap April’s National Insurance in efforts to help households. Truss has also sworn to scrap a planned rise in corporation tax, as high taxes are “choking off growth” in Britain’s economy.
Rival candidate Sunak has also vowed to lower VAT on domestic energy bills from 5% to 0. He has also pledged a reduction on income tax by 3p (which should happen by late 2029). However, Sunak emphasized these tax cuts will only happen once Britain has “gripped inflation”.
The Institute for Fiscal Studies (IFS) said it was concerned by both candidates’ tax cut plans, due to the economy’s “deteriorating outlook”.
GBP/USD over the past year
EUR: Eurozone inflation expected to hit 8.9%.
This morning the euro is choppy against the pound but remains stronger overall. Against the dollar, the euro is weaker.
Eurozone Inflation Rate YoY Final will be released later this morning. The previous inflation rate increased to a new record high of 8.9% in July of 2022, exceeding market expectations of 8.6%. Inflation is predicted to hit 8.9%.
Data on eurozone construction output will also be released today. Figures are expected to fall to 1.8% after last month’s in increase to 2.9%.
USD: US home sales continue to decline and retail sales came to an unexpected halt.
Yesterday the dollar steadily rose against sterling following the latest UK inflation data. This morning the dollar continues to strengthen against both the euro and sterling.
Yesterday’s Mom retail figures for July unexpectedly halted at 0%, disappointing markets which anticipated a 0.2% increase
Today, data on existing home sales will be released. Home sales plunged to a seasonally adjusted annual rate of $5.12MM in June, well under market forecasts of $5.38 million. Markets are predicting sales will decline further, to an even lower $4.8 million.
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