The pound continues to slowly give up some of its recent gains. Yesterday, data showed that the UK inflation rate fell unexpectedly from a figure of 2.2% in October to a four-year low of 2.1% in November, ever closer to the Bank of England’s target.
An analysis of the data showed that the drop in the rate of consumer inflation was driven by lower energy and food prices but this was partially offset by a rise in prices in transport, recreation and culture costs.
Meanwhile property website Rightmove are predicting that UK property asking prices will rise by up to 8%t in 2014 but also reported that UK average property asking prices fell by 1.9% month-on-month in December. In comparison with a year ago, asking prices are now 5.4% higher.
The Rightmove data showed that this is the smallest December fall since 2006, a pointer indicating that the recovery was gaining momentum.
Meanwhile, data from the British Retail Consortium (BRC) showed that footfall in UK stores was 2.9% lower in November than in October.
The BRC reported a drop of 2.7% in October.
In euro zone news, Angela Merkel was duly elected to a third term as German Chancellor after a vote in the lower house of parliament but the result of the recent elections means she has been forced into a coalition with the more left-leaning Social Democrats (SPD).
Merkel’s centre-right Christian Democratic Union party and the centre-left SPD have been in lengthy coalition talks to assume power and will now do so to govern the euro zone’s largest and most important economy.
Today is likely to be the most pivotal day of the week with the release of the minutes from the last bank of England policy meeting from the beginning of the month and the announcement from the Federal Reserve at the end of their latest policy meeting.