Pound tumbles away from recent gains

There is more chance of England winning the world cup than there is of second guessing the markets at the moment! After a fall inflation on Tuesday the Pound fell away from its recent highs and we were all set for it to break below key resistance levels against both the euro and dollar only for a string set of data releases yesterday that saw it rise up and beyond the levels we started the week at. Unemployment figures fell again as we saw the rate continue to edge towards the magic 7% level. This has been talked as a level when the BoE will look at raising interest rates which is seen as a positive for sterling. Having said that the dip in inflation on Tuesday counteracts this theory as low inflation normally results in low interest rates.

For those of you trying to plot your way around the markets it is difficult to know which way to turn at the moment. If the next few months see’s a sustained fall in unemployment then no doubt we could well be heading for a rate rise sooner rather than later however if inflation follows suit we could be left in limbo.

A string of positive eurozone data releases has seen the Euro pick up after recently losing ground and it seems to be the USD that is losing out at the moment. Today we have UK retail sales figures, which are expected to improve and also eurozone GDP so it will be interesting to see who wins the GBP/EUR battle this morning. A quiet afternoon in the states with a few unemployment releases so it is likely this morning’s results will set the tone for the day.

As always your account manager here at Currency Index is always available to help you through these volatile times.