UK inflation also picking up
This morning's release of UK inflation figures have produced slightly higher than expected results, with the flat reading in July translating into an annualised rate of 2.1% - up from 2.0% and more than the 1.9% forecast. Alongside this, we see the core rate is also higher at 1.9% - also up a tenth, with the gain attributed to computer gains, accommodation and footwear and clothing. With wages also rising - as we saw last week - this is less of a concern for the economy and is well within comfortable limits for the BoE, who continue to see reasons for modest tightening - looking past Brexit.
However, it is hard to look past Brexit at the moment, and going into September and October, it is going to be a hard time for GBP. As we can see, the Pound is finding it tough to post even the modest of recoveries, with Cable contained by 1.2100 as the pair remains vulnerable to a test of 1.2000.
EUR/GBP is also finding persistent bidding on dips, with the mid 0.9200's the current area finding some demand, though we expect this will strengthen should we move closer to the 0.9200 area.
Near term, the data so far has been positive on the whole, though we have retail sales to come tomorrow. Even so, range trading looks to be the best we can get here, though a Cable move through 1.2110-20 would offer some short term reprieve - emphasis on the short term!