Inflationary data out of the British Office of National Statistics this morning put a negative slant on what some had assumed was a beacon of light in Western Europe. British housing has seen positive gains alongside steady increases to manufacturing production. Today’s inflationary data, however, appears to have turned the tide, dragging Britain into the quagmire of risk averse assets alongside its euro zone neighbors.
The UK consumer price index (CPI) revealed sluggish growth in one of the nation’s broadest measures of inflation. Expectations were for growth of 4.5%, but the actual 4.2% had some traders hesitant. The addition of sluggish RPI data and a negative HPI reading from Britain’s Department for Communities and Local Government (DCLG) added to the bearish sentiment, as did significant growth in the island economy’s trade deficit. Sentiment appears to have shifted bearish for the British pound (GBP) and may not turn back for the remainder of the week as a result.