Sterling had a pretty rough ride yesterday, falling almost 2 cents against the Euro following the latest inflation figures, that came in lower than expected. Due to this, it increases the chance of the Bank of England cutting interest rates again before the end of the year, or increasing their QE stimulus measures. This would make the Pound less attractive, and it duly weakened throughout the day yesterday, as the chart below shows:
This morning however the Pound made a slight recovery, due to wage growth and unemployment in the UK coming in better than expected.
Yesterday’s moves really illustrates how quickly things can change in the currency markets. A client looking to purchase €300,000.00 to purchase a property overseas would have needed to shell out an extra £3000.00 to buy the same amount of Euros, which is a huge cost increase in just one day.
Tomorrow we have the latest UK Retail Sales figures, and an announcement from the Bank of England regarding interest rates and QE. It’s highly unlikely that they will cut rates or increase stimulus, but we may see then hint at further action before the end of the year. If they do, then expect the Pound to fall further. If they are positive in their comments, then Sterling may get a slight lift.
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