Inflation sends Pound lower again

14 September, 2016

Ashley Finill

Yesterday the Pound took yet another knock down in the currency market as inflation figures were released in the UK and came out worse than expected. Consumer Price Index came in at 0.6%, although this was the same figure as the previous reading it was excepted to make an improvement, Producer price index also came in lower than expected at 0.1% from the previous 0.3%. In the Eurozone the ZEW survey for economic sentiment was released and was worse than expected however this did not seem to give sterling a boost as employment data was also released in the Eurozone and remained the same. This is further signs that Sterling is now back on the downward trend seen for the past few months as yesterday was it’s biggest daily loss for just over a month. Forecasts suggest that we could be at lows of 1.10 on the Euro and 1.20 on the USD. The ground that sterling has lost in the past week could be a sign that these views from market experts is not something to be overlooked, the gains sterling had made at the start of the month could be seen as the best rates we are going to see for the foreseeable future.

Today could be a rate shaker too as this morning at 10am the Eurozone will release industrial production figures and the US will be releasing Export and import figures. Anything positive for either data release could weaken the pound even further. Tomorrow will be a key day for Sterling as The bank of England Governor Mark Carney will be speaking about their decision on the interest rates. It is not expected to change, however that does not mean that a rate cut is out of the question. Should there not be a unanimous decision by the 9 members of the monetary policy committee to hold interest rates for the time being then this could also give a blow to Sterling and carry on this downward trend. If you have an expectation for rates to improve then it may be worth reconsidering your approach as it is extremely likely that the best buying rates are behind us and things to get worse in the coming months.

As always keep in touch with you account manger here at currency index for friendly guidance and information.