Sterling jumps on higher inflation figures

UK inflation figures have just been released, showing that the annual CPI reading was 2.3%, a little higher than expected and above the 2% target at which the Bank of England would normally raise interest rates. Following on from last weeks BoE minutes, the markets have taken the news that there is now a much higher chance of interest rates going up later in the year.

Mark Carney to speak at 10:35am

This caused GBP/EUR to jump from €1.1460 to €1.1535, but in reality we’re simply back to where we were this time yesterday. In about an hours time at 10:35am the BoE governor Mark Carney will be giving a speech and I think this will be key to the Pound holding on to these gains or not. On the one hand, the BoE have already stated that they will tolerate above target inflation for a period without moving interest rates. If Carney re-iterates this view later this morning, then it’s likely the Pound will fall. If however he replicates the view published in the most recent BoE minutes in which some members of the MPC said that they may want to move rates higher if inflation keeps rising, then the Pound may gain further.

Worried about the Pound falling?

Those with Pounds to convert to other currencies should give serious consideration however to putting some protection in place to cover the chance of the Pound dropping in the coming months as I outlined in yesterday’s post. There is a good chance we will see Sterling fall when EU negotiations begin, so if you want to lock in a rate in advance of the Brexit talks, contact us today to discuss your requirements and get a free quote. Even if you don’t have your funds available now, by lodging 10% of what you want to convert we can guarantee today’s rate for up to 2 years. This allows you to budget and means you won’t be affected should the Pound fall as many think it will.

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