By Carl Delfeld of Chartwell ETF and Chartwell Partners
UK (EWU) exchange-traded investors hoping for an interest rate cut to bolster the country's growth rate may have to wait a bit due to higher than expected inflation numbers and a fading sterling. EWU is down 1% this morning.
Peter Garnham of the FT reports that sterling dropped below $1.90 against the dollar for the first time in almost two years.
This morning’s disappointing news that annual consumer price inflation rose to 4.4% in July, up from 3.8% in June and two-tenths of a percentage point higher than expected, underlines the policy dilemma facing the Bank of England. The largest upwards change since records began leaves CPI more than twice the 2% targeted by the Bank’s monetary policy committee.
On the plus side the UK market is trading at just nine times earnings relative to a global p/e of thirteen and sports a nice 20% return on equity based on S&P data as of August 1st.
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