UK Inflation for November has fallen more than expected this morning, providing some much-needed relief for both consumers and households. Inflation had been expected to fall from 3.6% to 3.5%, but due to a drop in Food, Tobacco and Women’s Clothing, Inflation has fallen to 3.2% which is it’s lowest levels since March of this year.
Services Inflation also dropped from 4.5% to 4.4% and this now makes an interest rate cut by the Bank of England tomorrow all but nailed on. The expectation is a 25 basis-point cut from 4% to 3.75%. It should be noted, Inflation dropping overall is a massive boost for consumers in The UK, but the reason why The Pound has dropped is due to the fact that financial markets do not like low interest rates as it usually deters foreign investment for the economy. However, with falling Inflation and pending rate cuts, this should prove to be the boost the economy needs for more consumer spending and growth over the coming months.
Later this morning we also have November Inflation figures for Europe due to be released. Current expectations suggest current prices will remain unchanged, so it wouldn’t be a surprise to see minimal movement for The Euro, with The European Central Bank seemingly comfortable with Inflation sitting at 2.4%. If there was to be any surprises similar to The UK this morning, then we could see moves in either direction for Euro currency pairs.
GBP/EUR 1.1359 GBP/USD 1.3315 GBP/AED 4.8925
GBP/AUD 2.0123 GBP/CHF 1.0627 GBP/CAD 1.8343
GBP/NZD 2.3065 EUR/USD 1.1706 GBP/ZAR 22.3059