Forex & Economic Commentary by Lloyds TSB

Economic data overnight showed a first rise in UK consumer confidence in August since January. The GfK index edged up to -36 from -39 in July. The result is in contrast to yesterday’s gloomy retail message of the CBI distributive trades survey. We believe that higher inflation and the consequential reduction in real incomes, rather than the credit crunch, is the key factor applying downward pressure on consumer spending.

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