CPI: what's been supporting sterling, despite the UK's political turmoil, time to fade? - Scotiabank

Analysts at Scotiabank explained that the UK CPI data rose 2.9% in the May year, above forecasts for a 2.7% gain.

Key Quotes:

"Core prices rose 2.6% in the year (2.4% forecast), the fastest clip since late 2012. Exchange rate-sensitive components of the index appear to be supporting gains in headline prices. UK PPI input prices fell 1.3% in the May month, however, and factory gate prices were unch at +3.6% in the year."

"UK house prices rose 5.6% in Apr, above forecasts."

"Sterling has firmed in response to the CPI, with higher prices getting close to the point where Gov."

"Carney will have explaining to do to the government; tighter policy at this point remains unlikely, however.

We think GBP gains are fadable given ongoing political risks."