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Updated 22:48 21/10/20

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FTSE climbs as inflation figures hit the Pound


Liam Sheasby

Liam Sheasby, News Editor
19 Jul 2018, 9:53 a.m.

Newly released inflation figures from the Office for National Statistics show that last month the UK rate of inflation was 2.4% - less than market analysts had predicted having accounted for rising oil prices.

Following the news, the Pound lost 0.72% against the Dollar in trading to hit $1.3014, while it was a smaller loss of 0.25% against the Euro to reach €1.1216. The FTSE 100 rallied thanks to the weakened Pound Sterling and closed at 7,676 – up 50 points for the day.

The London Stock Market has started the day up by 9 points, but the market suffered following the recent meeting between Presidents Trump and Putin in Finland as investors paused their trading and let oil prices come down.

Mr Trump had an additional impact on the FTSE exchanges too, having criticised the Brexit process and the UK’s approach to leaving the EU customs union in the days before whilst touring Britain. While investors take the US President’s comments with a pinch of salt, the worry is that his unhappiness with the negotiations could impact British/American trade relations on top of the lengthy re-negotiations with each EU state.

The price of gold also rose following the Pound’s depreciation, having been subdued by the Dollar’s current strength. Gold rose from £933.71 to £939.46 per ounce but is currently down slightly at £937.42.

Inflation in the UK has sat at 2.4% for the past four months. No rise in inflation means less chance of an interest rate rise from the Bank of England next month at the next Monetary Policy Commission meeting. It was expected that the Bank of England would likely raise rates in August – perhaps for the last time this year – having had 3 of its 9 members vote in favour of such a rise at the last MPC meeting. Andy Haldane, Ian McCafferty and Michael Saunders all voted in favour of an interest rate rise, believed to be 0.25% based on previous rate rises.

The next meeting is due to be held on Thursday August 2nd, with the minutes to be released to the press and wider public around midday.

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