The Dollar strengthened yesterday afternoon when figures revealed U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing. This provided a welcome boost as the data suggests the economy remained strong early in the third quarter.
Data also showed manufacturing output rising steadily last month and worker productivity growing at its fastest pace in more than three years in the second quarter, though a drop in labour costs pointed to moderate wage inflation.
Strong figures support expectations the Federal Reserve will raise interest rates in September for the third time this year, despite volatility in emerging markets that was sparked by an economic and political crisis in Turkey.
Inflation in the UK rose to 2.5% in July, after holding steady at 2.4% in the previous three months, as the cost of transport and computer games increased. It was the first jump in the Consumer Prices Index (CPI) measure since November meanwhile the Retail Prices Index (RPI) measure of inflation fell to 3.2%.
The inflation figures show that increases in computer games and transport - up 5.6% in the year ending July 2018 - were partially offset by falls in the price of clothing. For manufacturers, the cost of raw materials was 10.9% higher than in July 2017, much of that cost pressure has been caused by oil price increases of more than 50% over the period.
09:30 – GBP: Retail sales expected to increase to 0.2%