After hitting the best level to buy Euros since May 2017 the Pound began to fall during the middle of last week after UK inflation data showed a fall compared to the expectation. The table below shows the market movements for a number of currency pairings in the last 30 days:
|Currency Pair||% Change||Difference on £200,000|
The Pound continued its demise following the comments made by Bank of England governor Mark Carney when he suggested that the uncertainty caused by the Brexit could cause the central bank to think about when they may raise interest rates.
According to some reports the chances of a rate hike next month are as high as 85% and this is in my opinion difficult to argue against. On Friday afternoon the Pound started to make a recovery against a number of major currencies after the MPC member Michael Saunders dismissed signs of a UK economic slowdown.
According to some reports the chances of a rate hike next month are as high as 85% and this is in my opinion difficult to argue against.
On Friday afternoon the Pound started to make a recovery against a number of major currencies after the MPC member Michael Saunders dismissed signs of a UK economic slowdown.
Saunders has been a key advocate in favour of raising interest rates recently and has suggested that the recent slowdown in the economy is simply a ‘blip’. With Retail Sales showing a fall recently it could be argued that as weather has been so bad this could be the main reason for the fall rather than a lack of consumer confidence in the UK. He went on to say that ‘the significance of this apparent slowdown is…questionable.’
Although inflation fell to 2.5% from 2.7% the figures are still above the target level of 2%. Earlier this month Average Earnings surpassed inflation levels and this in my opinion is a very valid reason for raising interest rates in the near future. Indeed, it could be argued that as the US has already begun to raise interest rates if we do not start to do it ourselves it could be too late to catch up.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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