Inflation could be a real issue for Sterling (Daniel Johnson)

Keep a close eye on Consumer Price Index Data.

We have seen a rather sharp rise in UK inflation of late. From 2.3% to 2.7%, inflation can be considered to be positive for an economy, but on this occasion it is a worrying sign. Inflation has risen due to the weak value of the pound. Retailers are now forced to pay more for their products and are handing down their price increases to consumers. Inflation is fine, provided the average wage rises at a similar rate. This is not the case at present and the pound is suffering as a result.

This is a direct result of the vote to leave the EU. I would have thought he rise in inflation would have come sooner, it is concerning it is occurring now at a rapid rate. this could spell big trouble for the pound. Keep a close eye on Consumer Price Index (CPI) data to monitor inflation.

UK Election. Where is GBP/NZD headed?

We have seen gains against the New Zealand Dollar of late, the main catalyst would be Theresa May’s announcement to hold a general election on 8th June. Usually a snap election should weaken the currency in question, however on this occasion the opposite occurred. It is a shrewd move by the PM to call an election when the opposition is so weak. A conservative victory is deemed to be the better option for the UK economy and Sterling strengthened as a result. I am of the opinion a conservative victory is already factored into current rates of exchange so I would not expect significant movements after the result is announced, provided there are no major developments in the mean time. I think we could have seen Sterling’s bullish run against the NZD coming to an end for the time being.

If you have a currency requirement I will be happy to assist feel free to e-mail me at [email protected]. Thank you for reading.