European markets are higher as calm is restored after a few days of geopolitical tension after North Korea said it had delayed a decision on a plan to fire missiles at the U.S. Pacific territory of Guam.
The pound drops after a lower than expected UK inflation report, slumping to a 5-week low against the U.S. dollar after data showing UK inflation held steady in July, defying expectations of a climb following a surprise tumble in the previous month. Annual consumer prices rose by 2.6 per cent last month, the same rate as June and below expectations of a rise to 2.7 per cent, according to the Office for National Statistics. The ONS put this down to lower motor fuel prices which helped to offset to the rising prices of clothing, utilities and food in the month. The core inflation reading, which strips out energy and food prices also held at 2.4 per cent.
And the UK government released the first of its official Brexit position papers looking for ‘frictionless’ trade between the UK and EU.
German GDP rose 0.6% in the second quarter, just shy of the 0.7 per cent expected. France, the second biggest economy in the single currency area, grew 0.5 per cent while Spain had its best performance in three years with a 0.9 per cent expansion.
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--- Written by Katie Pilbeam, DailyFX
