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14 Jan 2015
Pound sees scope for some rebound - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, comments on the media reports citing risks of deflation in UK, and further adds that Pound has seen excessive selling since the start of the year and might rebound.
Key Quotes
"The annual inflation rate drop to 0.5% in the UK yesterday has sparked a deluge of media reports about the risks of deflation becoming ingrained in the UK. Living here, this is somewhat laughable and bar filling up at the pump and buying certain foods I see nothing but rising prices."
"Goods prices are now down 1.0% after a -0.2% print in November. Energy prices dropped from -0.2% to -5.8% - with an 8% weighting it accounted for 0.45ppt of the drop in the overall index from 1.0% to 0.5%."
"The drop in December is entirely an energy related story. Non-energy industrial prices are falling modestly but in fact increased from -0.5% to -0.3%. And finally services inflation (46.0% weighting) is still above the inflation target at 2.3%."
"We maintain that rate expectations have been pushed too far out and the pound has scope for some rebound after excessive selling since the start of the year."
Key Quotes
"The annual inflation rate drop to 0.5% in the UK yesterday has sparked a deluge of media reports about the risks of deflation becoming ingrained in the UK. Living here, this is somewhat laughable and bar filling up at the pump and buying certain foods I see nothing but rising prices."
"Goods prices are now down 1.0% after a -0.2% print in November. Energy prices dropped from -0.2% to -5.8% - with an 8% weighting it accounted for 0.45ppt of the drop in the overall index from 1.0% to 0.5%."
"The drop in December is entirely an energy related story. Non-energy industrial prices are falling modestly but in fact increased from -0.5% to -0.3%. And finally services inflation (46.0% weighting) is still above the inflation target at 2.3%."
"We maintain that rate expectations have been pushed too far out and the pound has scope for some rebound after excessive selling since the start of the year."