UK Inflation at 3% – what can we expect for the pound?

This mornings UK inflation figures, released at 09:30, came out at the 3% level analysts were expecting. As a result sterling has actually fallen a fraction on this mornings trading as a fall in inflation eases the pressure slightly on the Bank of England.

What is likely to impact sterling?

Inflation is an area that the Bank of England will be keeping a close eye on and a fall from last months levels of 3.1% will be a slight relief for the central bank, although the Bank of England Governor Mark Carney will still need to write a letter to the Chancellor Phillip Hammond explaining why inflation is 1% ahead of the Banks target level.

The main focus for anyone buying or selling sterling still needs to be the impact of the next round of Brexit negotiations. GBP/EUR in its current range is actually doing very little, suggesting the market is playing a waiting game. If you look at the recent moves for EUR/USD historically a significant drive in favour of the Euro for this pairing would also create a significant move in EUR/GBP but this time around it is actually having very little impact with levels sitting between 0.90 and 0.87 which is a very tight and small range. This has been the case for the last three months and something that I believe will continue until the next round of Brexit negotiations are complete.

Should you have a short to medium currency exposure and you are concerned about current market trends then please get in touch for more information relating tu our currency services. Alternatively please email me for a free quote.

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