Inflation Key to Sterling Upturn

15 August, 2017

Nakhil Mahra

Another flat day in the markets yesterday meant the trading was relatively stable for the most part of the day. With pressure continuing to mount on the Pound. The current strength of the Euro has put considerable thought in Mario Draghi’s mind, the chairman of the ECB. should this strength continue there will be more serious calls for the easing of the QE program and an interest rate hike. However, Draghi has previously said not to get carried away as easing could have an adverse impact on the EU economy as a whole.

With inflation data out in the UK today – a drop in inflation, like last month, could make Carney think again about an interest rate hike. Will last month prove to be an anomaly and will we see another rise which will send the pound into further turmoil and further increase the costs of buying your Euros. Some analysts are predicting parity by the end of the year between the Euro and the Pound we can expect to see a decline in the rates. Inflation data out at 9.30am today.

This week is particularly busy with further data out Wednesday and Thursday certain to move the market. Those of you still hanging on to see if the rates improve at all may want to buy before it gets worse.