UK Weakness and Disinflation

Posted on Wednesday, October 14, 2009

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In the face of strong numbers coming out of China indicating much of the world may be coming out of the global recession faster than anticipated, the dollar isn't the only currency selling off. In fact, the Pound has been selling off at a faster clip due to some serious relative weakness brewing out of the United Kingdom. BBC News details:

A key measure of inflation has fallen to its lowest level since September 2004, official statistics show, further weakening the value of sterling.

The Consumer Prices Index (CPI) dropped to an annual rate of 1.1% in September from 1.6% in August.

Meanwhile, the Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments and housing costs, fell to -1.4% from -1.3%.

The pound fell 0.5% against the euro to a six-month low of 1.0628 euros.

It also fell to a five-month low against the dollar of $1.571, though pulled back against both currencies later.