UK inflation falls

This morning’s UK CPI inflation figure for May showed the headline inflation rate fell to 0.2%, from April’s 0.6% figure. Although this is good news for the economy as the Bank of England is keen to keep inflation under control, the effect on sterling is the opposite, since lower inflation means that interest rates may not need to rise as had been feared.

The Pound gave back its overnight gains against both the Euro and US Dollar, and particularly against the Euro, where exchange rates for buying Euros have been falling throughout the day.