Inflation figures today
14 August, 2012
Graham Harborne
Yesterday the pound fell against the euro but managed to make slight gains against the USD. As investors anticipated poor UK data in the week ahead the pound struggled, but growing anticipation that the ECB will assist the broken banks of Italy and Spain saw a positive for the euro which meant an all round weaker USD, improving rates for sending money to the USA.
Last week we saw the pound rise as Mervyn King quashed speculation that there were further interest rate cuts to come, but with inflation data due out this morning, and expected to show a fall, a further round of quantitative easing could not be too far away. This is seen as negative for the pound as it involves an injection of currency into the markets by the central bank and if you look at it as a simple supply and demand scenario the pound becomes cheaper to purchase for overseas investors.
It’s not only inflation data that could further pressure the pound. We also have retail sales, unemployment data and the BoE minutes all due this week and after the success of Team GB at the Olympics it could be all downhill for the Team GB currency. Your dedicated account manager at Currency Index is always available should you have any questions about the markets. The pound has been a pillar of strength in recent months but this week could easily see us slip down the medal table in the currency markets so you don’t want to miss out.
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