Eurozone inflation returns

There was relief for the Eurozone yesterday as inflation figures showed that prices across the single currency bloc are rising again, with October prices rising at 0.1%. However the Euro failed to gain any strength as the small revision does not seem likely to alter ECB President Mario Draghi’s likelihood of increasing Eurozone Quantitative Easing next month, which has been helping to keep the Euro cheaper against the Pound.

Indeed yesterday saw a new post-August high for the GBP-EUR pair, presenting Euro buyers with excellent opportunities to secure preferential exchange rates. The Euro was also cheaper after Friday’s GDP figures showed a less than convincing overall growth figure of 0.3%, with Germany’s growth slowing to 0.3% in the third quarter, Portugal at 0% and Greece’s economy contracting by 0.5%.

Against the US Dollar, sterling was stable yesterday, staying in the same +/- 1c range that we have seen for the past week.

UK inflation headlines today

This morning we have treasury committee inflation report hearings at 9am, followed by the UK’s main October inflation figures at 9.30. The UK’s CPI figure for the year to October is likely to affect the Pound; with prices stagnating recently, the markets will be looking for a return to positive inflation to raise the prospect of interest rate rises and give the Pound a boost. If inflation were to fall further into the red, we could see the value of the Pound fall back significantly this morning.

In a busy day we then have the keenly-watched Eurozone economic sentiment survey at 10am, and inflation numbers for the USA at 1.30.

ZAR at new all time low

Good news for those of you sending money to South Africa – over the weekend the Rand hit a new all time low against the Pound, with sterling buying around 22% more in South Africa than just 6 months ago.