Pound Sterling is stronger after the United Kingdom inflation data was reported to increase up to its highest level since 2012. This situation triggers certain expectations.
One of them is that the Bank of England or BOE will increase the interest rate earlier than before. That is why; pound is then becoming stronger right now.
When this news was released, the GBP / USD increased by 0.28% to $1.384. The UK inflation is going really well which means that the BOW may have a rate hike earlier.
Vice versa with the flattened US inflation, the Consumer Price Index or CPI in the United Kingdom is now rocketing. It was 3.2 percent higher year – over – year basis in August.
Food Prices are the Cause
The strengthening of inflation is the highest monthly surge in 9 years. The high difference between UK data in August 2021 and August 2020 is due to food prices.
The ONS explained that many restaurants and cafes are giving massive discounts in August 2020 (amid lockdowns) due to the government's Eat Out to Help Out scheme during the pandemic.
Meanwhile, in 2021, food prices began to creep up along with the loosening of social restrictions. The prediction has been made by the BOE outlook before.
They predicted that the sharp inflation increase in the UK may reach 4% this year. The strong movement may pushes the central bank to tighten the monetary policy earlier than the Fed or ECB
The Hawkish Bias may be Taken
The August consumer inflation data power in the United Kingdom may anticipating the expectation that BEO can take the hawkish bias. It is especially in the next week meeting.
Hugh Gimber of JP Morgan Asset Management said that the rising inflation and rising wages could support the BoE to become one of the first major central banks to raise interest rates next year.
This has been the crutch of the British currency for the time being. In the past week, Sterling has strengthened because of the support of labor data. That was showing a significant recovery.
It is especially from the impact of the pandemic. Therefore, the successful UK consumer inflation shot up ahead of US inflation potentially boosting the optimism of a BoE rate hike further
Meanwhile, the Australia’s Employment is Declining
On Thursday, the Australian Bureau of Statistics or ABS released the Employment Data change. It was declining from 2.2k up yo 146.3 in August period so far.
That number is far from the expectation of 90k decline and it is becoming the worst one since the first quarter of 2020. That was when the pandemic was firstly spread in Australia.
The Australia's decline in employment is inseparable from the surge in COVID-19 Delta cases. This situation forced the local authorities to impose restrictions in several states in that country.
Those are including the New South Wales (NSW), which is the most populous region there. It is for sure that the economic activities are limited where people are unable to move normally.
NSW has the Biggest Decline Record
If detailed further, the part-time category jobs fell by 78.2k in The Month of Agsutus 2021, 0.5 percent lower than the march 2020 period. In fact, this category of jobs still chalked up.
It is especially due to an increase of 6.4k jobs in July 2021. Meanwhile, the full-time employment slumped 68k, further down from a -4.2k achievement in the previous month.
By region, NSW was the area that experienced the largest decline, which was about 4.2 percent. Queensland followed it with a 1.1 per cent slump, as did South Australia and Tasmania.
They have lost by 0.3 percent and 0.2% respectively because of that situation. However, the unemployment rate decreased from 4.6% to become 4..5% in the same period.
