Euro Area Annual Inflation up to 0.1%

Euro area inflation is set to leap back into positive figures according to a flash estimate from Eurostat, rising to 0.1 per cent  in June from minus 0.1 per cent in May, higher than the 0 per cent that was forecast by many analysts.
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The data will come as a welcome boost to the European Central Bank, who have struggled against deflationary patterns in the euro area throughout this year, to combat the negative prices the bank expanded their quantitative easing programme to 80 billion euros per month, and in March lowered the bank deposit facility rate to 0.40 per cent.

Services are expected to have the highest annual inflation rate in June at 1.1 per cent, compared to 1 per cent in May, followed by food, alcohol & tobacco stable on 0.9 per cent compared with May, with non-energy industrial goods prices falling by 0.1 per cent,  while the decline in energy prices eased to minus 6.5 per cent, in contrast with minus 8.1 per cent in May.

Pound Continues to Consolidate Position

The UK pound has began today by consolidating its position against the US dollar, and is currently trading at $1.34 this morning GMT, while slightly behind the post-referendum peak of $1.35 yesterday, sterling has managed to hold the gains made in the past 24 hours, after plummeting from the ‘Brexit’ decision.

Against the euro, the pound also has managed to halt the losses made since the referendum result, and is trading at $1.21 so far GMT, in line with  yesterday’s trading.

In their daily report LMAX Exchange said that he market’s realization that Article 50, the legal pathway to leave the European Union, won’t be triggered any time soon has taken some of the momentum out of the Sterling short play, with the UK currency rallying nicely in Wednesday trade.

Additionally leveraged accounts have been amongst the names actively covering short exposure, though macro names have been reported on the offer in the 1.3500 to 1.3700 area.

Official figures have announced that the UK’s current deficit account of £32.6 billion for the first quarter of this year, which was reduced by a slender margin from the £34 billion recorded for the final three months of 2015.

Markets may now be less relaxed about the amount of borrowing required to make up the shortfall, in the wake of the decision to leave the European Union.

The total trade deficit widened to £12 billion for the first quarter of this year, quarter on quarter rise of £0.4 billion, this was attributed to the trade in services surplus narrowing by £0.5 billion, partially offset by a slight narrowing in the trade in goods deficit by £0.1 billion.

German Retail Turnover Increases

 Germany has posted an increase of 2,6% in retail turnover in May this year, compared to the corresponding month a year ago, there was also a favourable contrast for the first five months this year compared to the same period in 2015, where retail activity  was 2% higher.

Month on month the figures were also positive, with 0.9% turnover hike in the sector between April and May.