Brexit Deal And UK CPI Inflation In The Spotlight

15 / 01 / 2019 | Market News
The political developments in the United Kingdom will be top news this week as prime minister Theresa May will be putting an effort to avoid a no deal Brexit which could have serious consequences for the country. Theresa May has urged the members of the Parliament to vote in favour of the deal with the European Union (EU) today, but political analysts suggest that the deal will be rejected. However, market analysts will also be focusing on the release of the Consumer Price Index (CPI) inflation data for December 2018 which are due to be released on Wednesday January 16th 2019 by the Office for National Statistics (ONS). 

UK CPI inflation likely to have dropped in December 2018

According to market analysts’ forecasts, the UK’s CPI inflation is likely to have dropped to 2.2% during December 2018 on a year-to-year basis from 2.3% in November 2018. The CPI is an indicator used to measure the rate at which the prices of goods and services bought by households rise or fall, which is the rate of inflation, referred to as the CPI inflation. If the figure is confirmed by the ONS report, CPI inflation will have come closer to the Bank of England’s (BoE) target of 2%. 

The ONS will also release data regarding the UK’s core CPI inflation in December 2018. Core CPI inflation is inflation excluding the prices of seasonally volatile products such as food and energy. According to analysts’ forecasts, the UK’s core CPI inflation is expected to have remained unchanged at 1.8% on an annualised basis during the last month of 2018. 

ONS data published on December 19th 2018 showed that the CPI inflation rate in November 2018 had fallen to a 20-month low which was in line with the economists’ forecasts. The biggest monthly fall in petrol prices since 2015 had played a significant role in that. An Internationale Nederlanden Groep (ING) report released on December 19th 2018 said that the BoE would face some issues regarding prices at the beginning of 2019. “For the BoE though, the key question is whether the recent upward trend in wage growth translates into greater core price pressure next year. With economic growth stalling, we suspect the Bank will be forced to sit on its hands through much of the first half of next year, and potentially even longer should the article 50 period need to be extended to allow more time to reach a Brexit solution,” was written in the Dutch bank’s report. 

Apart from the CPI inflation data, the ONS is going to be publishing a report associated with the Producer Price Index (PPI) for December 2018 which captures the changes in the average price of a fixed basket of goods and services purchased by the UK manufacturing firms. Market analysts suggest that the Producer Price Index Input lowered in December 2018 to 3.5%, on an annualised basis, from 5.6% that was recorded in November 2018. 

STO and the British Pound

The British Pound against the US Dollar, the Euro and the Japanese Yen are just some of the currency pairs you can trade with on the STO online trading platform. Traders can take advantage of the STO’s Forex variety and choose from over 30 currency pairs when trading. STO provides its clients with educational courses to help them encounter the various trading challenges. 

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