Morning Note: UK Food Costs Spike; Earnings Watch for Visa & Coke

UK Food Inflation Hits 11-Month High

British food price inflation rose to its highest level in nearly a year in April, according to a survey released on Tuesday. The British Retail Consortium (BRC) reported that food prices increased by 2.6% year-on-year, up from 2.4% in March and marking the steepest rise since May 2024, when inflation reached 3.2%. Despite this, overall shop prices fell by 0.1% in the 12 months to April, following a 0.4% annual decline in March.

Moreover, the BRC warned of further upward pressure on prices in the coming months as retailers face rising costs, including a new packaging levy set to take effect in October. The Bank of England is closely monitoring how these increased costs, alongside a heavier tax burden on employers, could affect retail prices and contribute to persistent inflation. Although the headline inflation rate slowed to 2.6% in March, the BoE expects it to climb to around 3.7% later this year, well above its 2% target amid rising household bills and growing labour costs.

(GBP/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the GBP/USD currency pair has been moving in a bullish trend since mid-January 2025, as indicated by a series of higher highs and higher lows. Recently, it broke above the order block at 1.3390 – 1.3420 with strong bullish momentum, suggesting the pair could potentially continue moving higher.

Visa Set to Report Q2 Earnings

Visa Inc. is scheduled to report its second-quarter fiscal 2025 results today after the market closes, around 20:00 GMT. Analysts expect earnings for the quarter to come in at $2.68 per share, on revenues of $9.56 billion. For the full fiscal year, Visa’s revenue estimate stands at $39.6 billion, reflecting a 10.2% year-over-year increase. The consensus forecast for full-year earnings per share (EPS) is $11.30, projecting a growth of approximately 12.4% from the previous year.

Visa’s performance will likely benefit from the rising adoption and popularity of digital payment methods. Since the company earns a fixed percentage of the total transaction value each time customers use debit or credit cards, an increase in consumer spending translates into higher transaction processing revenues, which should positively impact the quarterly results.

(Visa Inc Share Price Daily Chart, Source: Trading View)

From a technical analysis perspective, Visa Inc.'s share price has been moving in a bullish trend since the end of July 2024, as indicated by a series of higher highs and higher lows. Recently, it has undergone a bullish correction and is currently retesting a bearish trendline. If the price breaks above this trendline, it could potentially surge upwards to retest the resistance zone. Conversely, if the trendline successfully holds and prevents a breakout, the price might move lower.

Coca-Cola Q1 Preview: Modest Declines Expected

The Coca-Cola Company (KO) is scheduled to report its first-quarter 2024 earnings on April 29, before the market opens. Analysts anticipate that both revenue and earnings will show year-over-year declines. The estimate for earnings is pegged at 71 cents per share, reflecting a 1.4% drop compared to the prior-year quarter. Meanwhile, revenue for the quarter is projected at $11.1 billion, implying a 1.6% decrease from the same period last year.

Despite the expected dip, Coca-Cola continues to demonstrate resilience, supported by strong business momentum. The company's diverse brand portfolio, strategic investments, and consistent revenue growth across segments have underpinned its performance. Effective pricing strategies and higher volumes have further contributed to sustaining its positive trajectory.

(Coca-Cola Share Price Daily Chart, Source: Trading View)

From a technical analysis perspective, Coca-Cola's share price has been moving in a bullish trend since the beginning of January 2025, as indicated by higher highs and higher lows. However, it has encountered bearish pressure from the resistance zone of 72.80 – 73.30, causing the price to move lower. As a result, it may temporarily experience downward movement, potentially retesting the support zone of 68.00 – 68.50.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.