U.K headline inflation likely to have come in at 2.5 pct in July, economy to decelerate in 2017 Wells Fargo

The headline inflation in U.K. is likely to have remained flat in July. According to a Wells Fargo research report, the consumer price inflation is expected to have come in at 2.5 percent, as compared with the prior month’s figure of 2.6 percent.

Monetary policymakers in the country are among the few central bankers in the advanced world facing too fast, rather than too slow inflation. The headline inflation has come in higher, partially because of the marked depreciation of sterling in the wake of last year’s Brexit referendum.

Rapid inflation and stagnant wage growth have impacted household’s real disposable income, putting some headwinds on consumer spending.

“Of the advanced economies for which we explicitly forecast economic growth, the U.K. economy is the sole one we expect to decelerate in 2017 relative to 2016”, stated Wells Fargo.

The BoE’s Monetary Policy Committee expects inflation to accelerate further in the months ahead and peak at about 3 percent in October before the inflationary pressure from the sterling’s depreciation starts to wane.

“If the U.K. economy can achieve some modest strengthening over the next 18 months as we expect, the BoE could raise rates as soon as next spring”, added Wells Fargo.

At 22:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at 2.40451, while the FxWirePro's Hourly Strength Index of US Dollar was bearish at -75.4199. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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