Today could be an extremely important day for anyone with sterling requirements. Should you be selling or buying the pound, today we have the quarterly inflation report by the bank of England. Now when when Mervyn King normally speaks on matters of the economy, he has a tendency to talk the pound down. It is likely that the Bank will have to raise its inflation forecasts, and cut its growth forecasts for 2011 and 2012.
We also have some unemployment data out for the UK too. I am sure there will be movement on sterling exchange rates after the data is released to the market at 9.30 AM.
I feel that over the next few months the pound could slip away from its current spike against a host of currencies. I believe that we could see significant public sector unemployment. This could lead to a dip in consumer confidence and reduced spending in the economy which could have a knock on effect to the growth of the UK economy and weakening our GDP.
For these reasons I would not be surprised that if over the next few months the pound could could slip back down to the early teens against the Euro and back into the 1.40’s against the USD.
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