On Tuesday the UK's Office for National Statistics, the country's largest independent producer of official statistics, indicated that the Bank of England could be in danger of being stuck between a rock and a hard place.
With inflation ticking up in June before the fall in the pound following the EU referendum has really been factored in, a significant rise could be on the cards over the next few months.
This would present governor Mark Carney and his colleagues with quite a conundrum. They seem to be minded to cut interest rates from the already ultra-low 0.5%, but if inflation is indeed coming through that could put unwelcome momentum into price rises across the British economy, leaving their hands tied.
On top of that, the International Monetary Fund (IMF) announced its 2017 UK growth forecast has been slashed to 1.3% from 2.2% and to 1.5% from 1.7% for 2016. This is largely due to the Brexit fallout. The IMF also trimmed its 2016 global growth forecast to 3.1% from 3.2%.
Then there is all the geopolitical instability to consider. Turkey is in turmoil and terrorism around Europe has been taking the headlines. Both these things will only speed the rise of the populist movements markets tend to be very averse to.
"This morning the ONS indicated the Bank of England could be in danger of being stuck between a rock and a hard place"
Beacon in sight
There is however a beacon of light in the form of the United States economy. If Uncle Sam is gathering economic momentum, it could be enough to drag the rest of the world along.
The latest jobs data was very encouraging. The US created 287,000 jobs in June, comfortably outstripping expectations of 175,000.
Manufacturing data has been trending up as well, with the PMI reading for June up to 51.3 from 50.7. America’s big companies have also been doing very nicely in most cases as results season ticks along, and equities have risen accordingly.
“After a slow start to the year the US economy is coming back to life; US consumer growth is strong, US employment figures rebounded in June after a weak monthly previously and ahead of expectations,” said Adrian Lowcock, head of investing at Axa Wealth. “Reporting season is underway in the US and so far there have been some pleasing numbers coming out of corporate America. As such the US market has been on a bit of a run over the last month and is reaching new all-time highs.”