Following news that UK inflation has fallen to 2.6 per cent in June, Nick Leung, research analyst at WisdomTree in Europe, comments that we haven’t seen the last of inflation yet as Brexit negotiations have the potential to increase volatility in the pound.
Leung says: “Today’s inflation reading is slightly softer than expected, underpinned by a combination of oil price weakness, a stabilising pound and import-cost induced inflationary pressures undermining consumers’ debt-fuelled spending power.
“The latter in particular will likely encourage the BoE to delay the rate hike cycle for as long as possible, especially against a backdrop of weakening business sentiment and absent wage increases further eroding UK consumer spending.
“Alongside a divided UK cabinet that is yet to adopt a coherent Brexit strategy, ongoing political uncertainty will continue driving volatility in the pound and UK inflation over coming months.”
