The Pound is once again on a knife edge this morning ahead of unemployment data due out this morning. Should we see another negative release for the U.K we could be pushed even closer to the 1.10 level following the surprise fall in inflation yesterday.
Following that release the Pound dropped against most major currencies and even I didn’t expect that! As I have been saying for some time now this market really is not one to play around with and the outlook doesn’t look like it will change for the time being.
Interest rate hikes in the U.K appear once again to be drifting away and with that so does the value of the Pound, this time last year most analysts were predicting three rate hikes in 2010 and Sterling to be way into the 1.20s by the end of last year, it nearly got there, however we have had no rate hikes still and may not for some time and the Pound has taken a huge knock again against most currencies.
The only shining light for those with currency to buy is against the Dollar, we are still at great levels as the States appear to also have lots of problems of their own and are also quite a way off of a rate hike.
An interest rate hike is generally seen as positive for the currency concerned as it makes it more attractive to investors and the markets move on rumour as well as fact so the mere chance of a hike can shift a currencies value quite rapidly.
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