Following the release of Consumer Price Inflation which showed figures falling to 2.4% in the month of April, the Pound has tumbled further against the Dollar to $1.3356.
As a result of the dip in inflation, tension has eased on BoE to increase interest rates.
Mike Hardie, Head of Inflation at the ONS says: “Inflation continued to slow in April, with air fares making the biggest downward contribution, due to the timing of Easter. This was partially offset by the rise in petrol prices.”
He also noted that the introduction of sugar tax has led to a huge rise in prices of soft drinks and even though the yearly growth in price for goods departing from factories remained the same, “the cost of raw materials increased, mainly driven by strong rises in crude oil prices.”
For consumer finances and BoE, the drop in inflation is great news, as their monetary policy is around a 2% inflation target.
Following reports of the Government making a backstop plan to keep some sort of relationship with the UK and EU, if measures to solve the issue around the Irish border fail, Boris Johnson urged Theresa May to “get on with” removing the UK from the customs union as promptly as possible.
In more news, reports of the Chinese government slashing import tariffs for automobiles has resulted in trade tensions between the US and China to ease and the US Dollar rally to slow down.
Tonight, investors are due to analyse the FOMC’s updated monetary policy meeting minutes to get an idea of how the committee would react to higher than anticipated inflation.
The Euro has fallen against the Pound and faces pressure against the Dollar due to Italy’s uncertain future in the single market. Moreover, PMI data release today indicated a cooling of the Eurozone economies.