Yesterday saw the release of the UK consumer prices index (CPI) which showed inflation rose 4.5%, up from 4% in March. It still shows that the inflation is driven by external pressures such as fuel costs. The retail prices index (RPI) which includes mortgage interest payments fell to 5.2% from 5.3% in March.
Following the approval of a €78bn bail-out for Portugal the EU finance ministers continue their meeting in Brussels with the focus now expected to be on Greece. It is widely accepted that the €110bn bail-out last year was not enough.
Mothercare announced the closure of 110 stores throughout the UK high streets ahead of the Unemployment figures released today which showed unemployment increased last month to 4.6% against market expectation of 4.5%.
The Bank of England monetary policy committee voted 6-3 against raising interest rates and 8-1 to hold the bond purchase scheme at £200bn. Sterling has once again come under extreme selling pressure against the sixteen most actively traded currencies. It has dropped below 1.14 against the Euro and 1.63 against the US Dollar.
We may see a weaker US Dollar in years to come especially if the Chinese Yuan appreciates between 5 – 7% over the next five years in line with market analysts and traders expectations. If this happens the Dollar would slide anything between 20% and 30% against a basket of currencies, hence the reason the USA is keen for China to revalue the Yuan.
