UK Inflation Concerns Hit The Highest On Record For Businesses

“More UK businesses than ever before are worried about inflation, and a record number are planning to increase their own prices,” said Bloomberg while conveying the latest British Chambers of Commerce (BCC) details on early Thursday morning in Asia.

The news also quotes Suren Thiru, Head of Economics at the BCC as saying, “A substantial inflationary surge is likely in the coming months.” Still, “the notable uptick in concerns over higher interest rates underscores the need for the Bank of England to proceed with caution on further rate rises to avoid undermining confidence and an already fragile recovery,” adds BCC’s Thiru.

Key Quotes
The poll of almost 5,500 firms is the latest evidence that a wave of price gains is eating into confidence across the economy.

Prices are rising at their fastest pace in a decade, adding to a squeeze on consumers and industry coming from higher taxes and energy costs.

The survey is an indication that Britain’s economic recovery may have stalled in the fourth quarter.

As for market reaction, GBP/USD was hit hard as a side effect of Federal Open market Committee minutes, released on Wednesday resulting in a quick drop into an area that could be expected to act as support.

The news helped GBP/USD to pause the declines, triggered by the Fed Minutes, around 1.3550. However, the final reading of today’s UK Services PMIs for December and US ISM Services PMI will be important to watch for short-term direction.