{"id":18328,"date":"2011-01-20T07:20:54","date_gmt":"2011-01-20T12:20:54","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=18328"},"modified":"2011-01-20T07:20:54","modified_gmt":"2011-01-20T12:20:54","slug":"concerns-over-uk-inflation-continue","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/01\/20\/concerns-over-uk-inflation-continue\/","title":{"rendered":"Concerns Over UK Inflation Continue"},"content":{"rendered":"

In Brief<\/strong><\/p>\n

<\/strong>A consensus is emerging that the Bank of England is unlikely to raise interest rates to combat inflation.<\/p>\n

Unemployment among under 25s in the UK has hit record highs.<\/p>\n

New figures accounting for the construction of new homes in the US have been disappointing.<\/p>\n

In Depth<\/strong><\/p>\n

UK<\/strong><\/p>\n

Good morning! The markets continue to focus on rising UK inflation this morning, which hit 3.7% according to recent CPI (Consumer Price Index) figures.<\/p>\n

The expectation yesterday was that the Bank of England would raise interest rates to combat this, and this buoyed sentiment in sterling. (Increased interest rates mean higher returns for investors.) This morning though the consensus has changed, and the markets seem convinced the Bank will not risk the UK economic recovery with higher interest.<\/p>\n

There was additional bad news for the UK yesterday. Newly released figures show that unemployment in adults under 25 is nearing one million. This is the highest figure since records began in 1992, and bodes ill for British employment. Numerous commentators have in fact noted that unemployment in the UK is likely to increase further in 2011.<\/p>\n

EU<\/strong><\/p>\n

It was a quiet day for the euro zone on Wednesday. Following the close of a two-day meeting between EU finance ministers, the markets are still waiting for a solution to the periphery debt crisis. This could take the form of an increased EFSF bailout fund. However, German Chancellor Angela Merkel is wary of contributing German funds to nations unable to manage their own finances.<\/p>\n

The next meeting between EU ministers is scheduled at the beginning of February. It is possible that some kind of collective solution to the crisis will be announced then.<\/p>\n

US<\/strong><\/p>\n

The meeting between Chinese President Hu Jintao and US President Barack Obama began in earnest yesterday. Little has so far been accomplished, but reports are positive. Jintao for instance sought to repair the Chinese human rights record by announcing the \u2018universality of human rights.\u2019 This is a significant leap for a Chinese Premier, and points to warmer US-Chinese relations.<\/p>\n

In US economic data meanwhile the US Housing Starts numbers for December were released yesterday. These recorded a 4.3% drop in the number of new homes constructed, indicating that the US economic recovery has some way to go yet.<\/p>\n

Coming Up<\/strong><\/p>\n

The latest Consumer Confidence figures for the EMU are released today. These indicate how prosperous citizens inside the euro zone feel, and could affect the euro. In the UK meanwhile, the latest CBI Industrial Trend report is released later on too. This accounts for everything from trends in import and export to business confidence.<\/p>\n

Finally, the latest sales figures for existing homes in the US are released today too.<\/p>\n

By Peter Lavelle with specialist money transfer service<\/a> Pure FX.<\/p>\n","protected":false},"excerpt":{"rendered":"

In Brief A consensus is emerging that the Bank of England is unlikely to raise interest rates to combat inflation. Unemployment among under 25s in the UK has hit record highs. New figures accounting for the construction of new homes in the US have been disappointing. In Depth UK Good morning! The markets continue to … <\/p>\n

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