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UK Inflation Falls to Record Low (Matthew Vassallo)
UK inflation figures were released this morning and showed a sharp fall to 0.5% in December. This equals the lowest figures on records according to the Office for National Statistics (ONS) and will trigger a letter of explanation from Bank of England (BoE) governor Mark Carney to the chancellor.
This level falls some way below the BoE’s target of 2% and a major cause for the drop is attributed to lower fuel prices. However, chancellor George Osborne hailed the fall as good news and the markets have taken it in their stride with little additional movement caused on either GBP/EUR or GBP/USD exchange rates.
With little economic data of note for the UK for the rest of the week, we may find the Pound struggles to gain much momentum from its current position, particularly against the EUR. GBP/EUR has reached the current levels a handful of times over the past 12 months and each time it has the EUR has found support and spiked back towards 1.25. The key date in investors diary will be the ECB monetary policy decision on January 22nd, where we could see full scale Quantitative Easing (QE) initiated by the European Central Bank (ECB).
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Source: http://www.poundsterlingforecast.com/2015/01/13/uk-inflation-falls-to-record-low-matthew-vassallo/
