Pound stumbles following slow down in inflation

17 February, 2016

Matthew Boyle

Yesterday was a bad day for the pound following morning data showing a slow-down in inflation, down to 0.3% from a previous 0.2%. As a result throughout the day’s trading it lost almost 2 cents against the Euro and just over that against the Dollar, whilst the Dollar gained around a cent against the single currency. Perhaps unsurprising the inflation figure has slowed given the recent u-turn by the Bank of England over interest rate hikes, with inflation being so closely linked to any move here. It’s certain that this bad news for GBP, not only for its own economy but given the losses seen yesterday and the continuing overriding market sentiment lying currently with the USD and EUR be prepared for further losses in the coming days.

Furthermore with the potential June UK referendum looming closer as we near the proposed date of June it is unlikely that the pound will find it easy to get any traction or strength, so the fall could be fast and severe. Should you have any upcoming Euro or Dollar requirements you may want to consider a forward contract which would allow you to fix the exchange rate with a small deposit, to prevent against any drops in rate and increase in your cost. Speak to your Currency Index account manager today for some friendly advice on how to book one.

This morning we have the ECB non-monetary policy statement followed by UK unemployment data and average earnings which is predicted to show a reduction, so any slip here could see the pounds losses furthered. In the afternoon the focus shifts across the Atlantic to the US with the main release of FOMC minutes.

With a busy day for data, we will no doubt see movements in the major pairings which as always remain extra volatile. If you have any upcoming transfers to make speak to Currency Index today – we can help you stay well informed and well ahead of the market.