Sterling drops as UK inflation increases

13 September, 2011


Normally an inflation rise would lead investors to speculate over an increase in interest rates giving the pound a boost but with the Bank of England firmly against this over worries of UK economic growth the opposite happened and the pound dropped, losing a quarter cent against the euro. Trade balance figures also released showed a drop of nearly half a billion pounds, when a slight improvement from last month was predicted, also adding to sterling’s woes.

Despite the poor results, we are still trading just off a six month high so if you need to send payments in Euros it could be a good time to look at securing your rate. Don’t forget Currency Index can offer fixed rates of exchange up to 2 years ahead, useful if you do not need your currency yet but do not want to miss out on some respite for sterling.

UK unemployment figures and average earning figures are out tomorrow morning with retail sales out for the UK and Eurozone inflation figures on Thursday, so plenty in the next couple of days to cause market volatility so keep in touch with your dedicated broker to avoid missing out.