Money Transfer News: UK inflation in line with expectations

The pound benefited yesterday from the latest UK inflation data out from the Office for National Statistics (ONS). The ONS reported that UK consumer prices expanded at the rate of 1.6% year-on-year in March, down on the 1.7% year-on-year rate reported last month and the lowest rate since October 2009.

Howard Archer, Chief Economist at IHS Global Insight commented that the March level of 1.6% could very well mark the low point for consumer price inflation (CPI) but expects the CPI to remain below the 2% threshold set by the Bank of England until the end of the year and possibly beyond.

The pound also received a boost when the euro was hit yesterday by a worse than expected German investor confidence figure.

The respected ZEW research Institute reported that Germany's investor sentiment index dropped more than expected in April primarily due to concerns over the Ukraine.

The ZEW survey for the euro zone as a whole was more positive as the result showed that that economic sentiment in the region fell less than had been expected.

Overnight in Australia, the minutes of the last Reserve Bank of Australia (RBA) policy meeting were published and showed that the RBA feel that economic developments in the past month had done nothing to sway its resolve to keep interest rates steady for a while and noted that there had been further signs that low borrowing costs were supporting growth.

The RBA continue to believe that the value of the Aussie is still high by historical standards and are concerned that its recent appreciation meant that the rebalancing of the economy has taken a setback, a somewhat dovish assessment which hit the Australian dollar in yesterday’s trading.

In addition, data just released shows that China’s annual economic growth rate has slowed to an 18 month low of 7.4% in the first quarter of 2014.

Analysts pointed towards a slowdown in industrial production but expect growth to rebound to 7.5% in the current quarter.