The Monday note - 23 July 2018

• The FTSE 100 dropped by 17 points from Monday’s open to close at 7,678.8 on Friday. The ten year Gilt yield stood at 1.23%. 
• Sterling traded at its lowest level in 10 months after retail sales figures declined more than expected. Sales were down 0.5% month-on-month, following 1.4% growth in May. 
• UK CPI inflation remained unchanged at 2.4% in June, as rising fuel prices counterbalanced a fall in the price of clothes. 
• The British government borrowed £16.8 billion between April and June 2018, which was down £5.4 bn on the equivalent period of 2017. 
  
  

Chief Economist comments: 

Two weeks ago, a UK rate hike in August was looking a near certainty, but the latest inflation figures have muddied the waters. The Bank of England’s Monetary Policy Committee (MPC) has been monitoring real pay growth, but wage increases are barely above inflation. If rates are left unchanged in August, the next time an MPC meeting coincides with the Bank of England’s internal inflation report is November.