Sterling Exchange Rates Await Inflation and Unemployment Data
Yesterday was a very quiet day on the currency market with Sterling continuing to trade in relatively tight trading levels and today it seems we could be set for another day of limited movement with little economic data set for release. However, tomorrow is the start of the major economic data and could well be the key day this week. We have the Bank of England (BoE) Quarterly Inflation Report and also the latest UK unemployment data both of which are vitally important to the fortunes of Sterling exchange rates. Unemployment has been major news for the UK as the BoE had previously mentioned that should unemployment level fall below 7% they would consider raising interest rates, however we are now well below this level and yet still no sign of an interest rate hike, this has led to Mark Carney, Governor of the BoE being likened to an unreliable boyfriend! Since the BoE have changed their stance on unemployment it has become slightly less important but it still remains a key indicator as to the performance of the economy and a further drop tomorrow should provide Sterling with support.
The Quarterly Inflation Report is an opportunity for the BoE to give their opinion on the performance of the UK economy and should we see that inflation is remaining around the 2% target level it could yet again be another positive indicator for the Pound and lead to GBP strength. Inflation in the UK has remained relatively flat which is a sign of a stable economy and is the complete opposite of the Eurozone who are heading towards deflation and has resulted in the European Central Bank (ECB) cutting interest rates. Should the Quarterly Inflation Report be positive for the UK it may go to highlight the disparity between the UK and Eurozone and as a result could lead to Sterling pushing back up towards the high levels we witnessed last month.
With such an important day for the UK and GBP exchange rates it will be worth speaking with one of our experienced and knowledgeable currency brokers here at Foreign Currency Direct plc so they can discuss the market outlook in more detail and the options available to you. You can call us for free on 0800 328 5884 or if calling from abroad call us on 0044 1494 725353 alternatively you can email me directly on email@example.com