Sterling Hits 21-Month Low Against U.S. Dollar
August 12, 2008
July’ Consumer Inflation report from the UK surprised the market to the upside for the forth consecutive month, rising to 4.4% y/y an 11 year high. The 0.6% increase in the annual rate from June’s reading marks the largest monthly surge on record. The breakdown reveals that the main contributors to the increasing inflationary pressures were rocketing food and fuel costs. With the annual inflation rate now being more than double the BoE’s 2.0% inflation target and house prices continuing to decline along with consumer spending, the BoE will likely have their hands full when setting monetary policy. On news of July’s CPI data the Pound declined 0.6% against the U.S. dollar, trading below $1.9000 for the first time since November 22nd 2006.