UK inflation takes focus ahead of Referendum

As we edge ever nearer to the big Referendum decision on Thursday, the markets opened yesterday relatively flat with a lack of data and continued uncertainty over the outcome later this week. Early trading saw small gains for sterling before the sellers quickly came in at these better levels to push the pound back down again with losses experienced against most major currencies by close of play.

The only data out yesterday saw a positive and improved trade balance figure for the Euro-zone at €21.2B, up from €16.7B last month. In the afternoon US Industrial Production came in with a 0.1% contraction against forecasts of a 0.3% growth. This poor data allowed the Euro to gain slightly against the USD but it did not have any impact on cable rates as the weak pound still lost further ground.

Today we get the key UK releases for the week under way at 9:30am with this month’s inflations figures. The headline figure is expected to remain at 1.6%, some 0.4% under the BoE’s target and as with previous months this could put more pressure on the pound as concerns over low inflation continue to restrict any short term interest rate changes. Shortly after ZEW confidence figures for the Euro-zone will be released at 10am.

Anyone not sure how to best approach an up and coming currency need would be wise to contact your account manager so that the real risks of the week ahead can be discussed in more detail, along with the various tools to help protect yourself from a potential fall out in the sterling markets. Forward contracts and Stop Loss orders are particularly popular with our clients during this uncertainty.