Sterling Declines on Elevated Inflation Report
July 15, 2008
June’s CPI release highlighted an up tick of inflation to 3.8% y/y, well above the Bank of England’s 2.0% target level and marking the highest rate of annual inflation since 1997. Rising food, fuel, utilities and transports prices were deemed as being the leading contributors to the increasing inflationary pressures. As such, BoE Governor Mervyn King is now expected to write his second letter of explanation to the Chancellor of the Exchequer (Alistair Darling). Following the gloomy CPI data and expectations for a disappointing employment report tomorrow the Pound declined upwards of 0.7% against the U.S. dollar.