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UK Inflation Data and the impact on Sterling Euro exchange rates
Sterling Euro dipped to its lowest rate in almost three months yesterday following the recent comments from Mario Draghi and the German vote that allowed them to continue to pump funds into the Euro zone. However, during yesterday afternoon’s trading session we saw a return of strength for Sterling against the single currency as worries rise again about Spain with the focus on Madrid. July’s trade dat showed a large drop in in import volumes reflecting the problems in southern Europe and the ongoing uncertainty in the region. With the Fed’s policy announcement recently we have seen Dollar weakness which often goes hand in hand with Euro strength so to me this recent form for Euro could be short lived.
The UK inflation rate has just been announced and showed a fall in the Consumer Price Index from 2.6% to 2.5% in August. With CPI having peaked at 5.2% during September last year it appears as though Mervyn King’s comments last year that inflation would naturally come down are ringing true. The data release was not really much of a surprise and coming in so close to expectation means that the currency markets have not reacted too much to the news.
Tomorrow see the Bank of England publish the minutes for September which will provide us with a key indicator as to whether or not QE could be happening in the future. My feeling is that there is a chance we could see further QE for the UK in November as that is when the current amount runs out and we should know by then how effective the previous attempts by the BoE to change monetary policy have been.
One huge event happening later this month is the Spanish bank stress test results which are due on September 28th. If they come out positive we could see a huge rally for the Euro but I think we could see a number of these banks struggling which could cause Euro weakness towards the end of this month.
For up to date currency information or if you need to exchange currency feel free to contact me Tom Holian [email protected] I look forward to hearing from you.
2012-09-18 03:20:41
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