Pound Strengthens Following Inflation Figures
The pound has pushed higher this morning following the latest inflation figures, which showed a notable increase in price pressures across key sectors.
Inflation in January 2025 rose to 3%, up from 2.5% in December, driven by rising costs in transport, food, and education. This marks a significant jump, reflecting persistent inflationary pressures in the UK economy.
Services Inflation at Highest Level Since August 2024
One of the key contributors to this rise was services inflation, which surged to 5%, its highest level since August 2024. This increase highlights the ongoing cost pressures in the service sector, which could influence future monetary policy decisions.
Bank of England’s Interest Rate Outlook in Question
This morning’s inflation data is likely to disrupt the Bank of England’s interest rate strategy, as policymakers balance the need to control inflation against the risk of stifling economic growth. While inflation remains elevated, expectations for near-term rate cuts are likely to be scaled back as the Bank considers its next move.
Market Focus Shifts to US Housing Data
With no major EU economic releases today, market attention will turn to the US Housing Starts data, which could provide further insights into the strength of the US economy.
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