UK Inflation Set to Bring Major Volatility (Ben Fletcher)

This morning at 9.30am the latest UK Consumer Price Inflation figures will be released for July, which is a indicator of inflation. There is a expectation that the result will be a slight increase from 2.6% to 2.7%. Last month the inflation level dropped from 2.9% to 2.6% raising doubts of a interest rate hike and the GBP/EUR rate dropped by nearly two cents. Today if inflation does rise slightly faster than expected then I think Sterling could see one of its strongest days in a while, with a movement above 1.11 a real possibility.

There will also be Producer Price Index which indicates the difference of the cost of producing goods for manufacturers. Once again any positive date could have a significant effect on the market.

Sterling’s main hope of a revival comes in the form of a interest rate hike. A rate hike will always help the host currency to strengthen so if inflation does climb up to the 3% level again, then the Bank of England may be forced to act.

UK Government put forward temporary Customs Union

The British Government in an attempt to calm down UK business uncertainty are going to suggest a temporary Customs Union be put in place with the EU whilst trade talks take place. At the moment the 2019 Brexit deadline looks like it may come to soon and British businesses may face something of a cliff edge. This suggestion if received well by the EU negotiating team could help Sterling find support as the uncertainty and risk become slightly diminished.

If you do have a question with regards to my comments or have a different question please get in touch. When you come to moving large sums of money a movement of a cent can often relate to a significant difference in your returns. Helping you formulate a strategy could make sure you’re in the best position to exchange currency when the market is in your favor, please contact me Ben Fletcher at [email protected]