UK Inflation Figures Announced – GBP Exchange Rates
This morning the latest set of UK inflation figures have been announced in the form of Consumer Price Index and Retail Price index. The Bank of England (BoE) is targetted by the Government to acheive consistent growth in the price of goods and services at a level of 2% however this morning we saw the level of inflation drop below that level which has led to Sterling weakness across the board. One of the main methods of controlling inflation by the BoE is to use interest rate changes, so if inflation is rising and the Bank wants to slow inflation a usual method if to increase interest rates as this in theory leads to less money being spent and therefore retailers needing to cut the price of goods to increase sales. So, should we see inflation rise, especially above the 2% level over the coming months it will be yet another factor putting pressure on the BoE to increase interest rates this year. While today’s numbers have actually shown a small decrease we are still at good levels of inflation which is something both the Government and the BoE will be pleased with, however I believe that the current economic climate could lead to an increase in inflation this year which may mean the Bank of England will not have it this easy for much longer!
So, inflation could be a key economic indicator for Sterling over the coming months, another major data set of note will be tomorrow’s unemployment figures which in my opinion could cause major Sterling volatility. Should the numbers come out better than expected and we fall below the 7% level it could result in Sterling strength pushing us even higher than the current levels. However, the reverse would also be true as if unemployment slows down then the chance of an interest rate hike moves further down the line and so we could see Sterling weaken.
If you need to make an international currency transfer then the next 24 hours could be crucial, as we have seen in recent weeks spikes in the currency markets are often short lived and so while we are at the current high levels it is worth speaking with one of our experienced currency brokers who will be happy to discuss your currency requirement and the options available to you. You can call straight through to our trading floor for free on 0800 328 5884 or if calling from abroad on 0044 1494 725353 alternatively you can email me directly on firstname.lastname@example.org