Pound Sterling Exchange Rates

This morning we have the latest set of inflation data for the UK which could have big implications on Sterling exchange rates as it is one of the key factors in how the economy is performing. Recently we had the Quarterly Inflation Report from the Bank of England (BoE) who stated that they felt inflation was sitting around the 1.9% mark which is a fairly strong level and very close to the 2% target the BoE are set by the Government. The expectation this morning is that inflation will actually show a slight drop to 1.8% which, if this is the case, could lead to some Sterling weakness however any improvement on this prediction could help boost GBP exchange rates. In the Eurozone we have seen inflation fall dramatically and this has led to concerns that the single currency economy is about to fall into deflation (where the price of goods and services are falling) which can be very damaging for an economy and therefore its currency. As a result of this decline the European Central Bank (ECB) cut interest rates and even set deposit levels to negative levels which led to the Euro weakening and in fact GBP EUR exchange rates pushed up to over a 2 year high. So, if the UK starts to witness the same problems faced in the Eurozone it could erode Sterling’s strength while an uplift will go to highlight the disparity between the UK and the Eurozone and may help push the Pound back up to the recent highs we witnessed.

USD Exchange Rates – More Inflation Data

There is more inflation data due to be released this afternoon with the US Consumer Price Index released at 13:30 BST and with the expectation for inflation to remain relatively stable around the 2% mark it could be Dollar positive and therefore may provide further support for the USD which has been strengthening against Sterling recently. So, if you need to buy or sell USD it will be worth speaking with one of our senior currency brokers here at Foreign Currency Direct plc as they will be happy to discuss the market outlook with you in more detail and the options available so that you can make an informed decision about when to transfer your funds abroad.

You can call straight through to our trading floor for free on 0800 328 5884 or if calling from abroad call us on 0044 1494 725353 alternatively you can email me directly on trh@currencies.co.uk