The pound starts Monday on a significant high, well over its recent peaks and knocking on the door of its post-referendum highs.
Sterling is nearly 11% stronger against the Turkish lira and 2 to 3% stronger against a range of commonly traded currencies than this time last week. Indeed, you have to go a long way down the currency charts to find one that the pound isn’t significantly stronger against, although, bad luck if you delayed a week buying your Haitian Gourdes.
For most of our clients, sterling being well over 1% better against the euro compared to last Monday morning – and 6% over the course of the year – will be of more interest.
The reason is that the leap in inflation to 4.2% has alarmed economists – in the UK at least – and the Bank of England is almost certain to increase interest rates in a succession of steps over the next year. That will probably start in around 20 days with the Bank’s interest rate decision on 16th December.
There is very little data coming out this week, but with the distinct possibility that a rate rise is now priced into trader’s calculations, the rate is, as ever, at risk of disappearing as fast as it appeared. We have already seen downwards movement this morning.
At almost any point in the past five years you would have been thrilled with a rate as high as this one, so to lock it in for almost the whole of 2022, call your trader on 020 8108 5337.
