Pound Sterling Forecast

Pound Sterling exchange rates have taken a hit today eradicating the small gains that were witnessed yesterday on the back of the higher inflation data.

This mornings data showed a surprise rise in the number of people claiming UK unemployment benefit. It was estimated that the figures would fall by 3000 people but we saw a rise in claims by 2300. This has led to some losses for the pound against a host of currencies straight after the data release but now the pound is clawing back some of the losses.

The worries for the UK now is that there are more signs that the UK economy following the U.S. for a sharp slowdown in economic growth. BoE Governor Mervyn King will likely mention today that cutting Britain’s deficit was essential but he would also leave the door open to further monetary easing if the economy falters.

Now that leaves me to beleive that although inflation is high the MPC would prefer to initiate Quantitative easing rather than put interest rates up at present. I would imagine that this would more than likely leave sterling exchange rates feeling the losses over the coming months.