The pound is mixed this morning, gaining against the broadly weaker dollar, but consolidating against the euro ahead of the July inflation report. Consumer price inflation is expected to have increased to 4.3% year on year from 4.2% in June. Additionally, retail price inflation is also scheduled for today and the numbers probably remained unchanged at 5.0% from June. Should we see any spike in the inflation figures above the BoE’s target, Governor Mervyn King is most probably going to exchange letters with Chancellor George Osborne for the seventh consecutive month. On the other hand, investors around the globe speculate that the Bank of England won’t raise borrowing rate until after July next year. The central bank will tomorrow publish minutes of its August policy meeting, when it left its benchmark interest rate on hold at 0.5%.
The euro dropped against most of its major rivals during morning session after a report showed that German economic growth slowed more than previously expected. The single currency came under pressure after data from the Federal Statistic showed German gross domestic product rose 0.1% from the first quarter, missing the expectation of a 0.5% expansion. That is putting second quarter year on year growth at 2.8% after first quarter growth of 4.9%. Looking ahead to today, Eurozone GDP headlines the economic calendar, with the expectations for the figures to have slowed in second quarter, given the disappointing reading in France and Germany.
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