GBP is worrying about state employee. Overview for 23.06.2022

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GBPUSD is falling – railway workers and teachers are on strike.

The Pound sterling is back to falling against the USD. The current quote for the instrument is 1.2203.

The statistics published yesterday showed that the Consumer Price Index in the United Kingdom was 9.1% y/y in May, the same as expected, after being 9.0% y/y the month before. The Core CPI showed 5.9% y/y against 6.2% y/y over the same period – it’s good news.

The RPI skyrocketed to 11.7% y/y after being 11.1% in April.

The PPI Input and Output showed 2.1% y/y (previous 2.7%y/y) and 1.6% y/y (previous 2.8% y/y) respectively.

So, prices are getting higher but not as fast as they could have been. At the moment, it doesn’t feel like it’s the limit for inflation, everything depends on details. Anyway, the Bank of England will have to respond to inflation in the areas where it is capable of changing the situation – which means that the benchmark interest rate will rise.

The Deputy Prime Minister of the United Kingdom Dominic Raab said that the government shouldn’t come to terms with labour unions. He believes that it needs to hold its ground if it wants to fight inflation. His opinion became well-known at the worst possible moment – these days, the United Kingdom is facing the biggest rail strike in 30 years. And teachers are next. Labour unions demand wage indexation to eliminate the negative effect of the increasing inflation this year.  

So far, the currency market is paying no attention to the strike, but the Pound sterling will definitely get under more pressure if it continues.

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