The pound fell to a monthly low against the dollar yesterday as the UK and EU continued to argue over trade issues in Northern Ireland following the UK’s exit from the EU. Both sides have issued sharp threats this week in a stalemate that could overshadow the UK-hosted G7 international summit this weekend.
Officials in Brussels say their London counterparts have failed to inspect some goods moving from British shores to Northern Ireland and have filed a lawsuit over the government’s unilateral extension of the grace period. This could lead to litigation or the possible imposition of tariffs and quotas. Funnily enough, the media dubbed the quarrel the “sausage war” due to its influence on the chilled meat movement.
The UK economy expanded 2.3% in April on Friday morning, the Office for National Statistics said on Friday morning, thanks to further easing of government restrictions that held back economic activity. It was the fastest monthly GDP growth since July 2020 and beat economists’ forecast of a jump of 2.2%. Monthly GDP in April is estimated to have grown by 27.6% compared to 12 months earlier.
By this morning, the pound had bounced against the dollar to a resistance level of 1.42.
US inflation soars to 13-year high
US consumer prices rose the most in nearly 13 years last month, as pent-up demand along with higher commodity prices sparked fears of inflationary pressures. As the Bureau of Labor Statistics reported yesterday, prices rose 5% in May from 12 months ago. It was the sharpest growth since August 2008 and accelerated from the 4.2% growth recorded in April.
Excluding volatile commodities such as food and energy, the core CPI jumped 3.8% year-on-year in May after rising 3% in April.
The recent price hikes were driven by two factors: low inflation at the onset of the pandemic and rising commodity prices and demand for rented cars, hotels and airline tickets as the US economy recovers.
The number of Americans applying for government unemployment insurance for the first time fell for the sixth straight week as initial applications fell 9,000 to 376,000 in the week ending June 4, the Labor Department said Thursday. Repeated claims due to continuing unemployment in the state fell 258,000 to 3.5 million in the week ended May 29, the largest decline since mid-March.
The only note left in the data diary this week is Michigan Consumer Sentiment Index for June.