The week has started quietly for sterling, with minimal movement on Monday against EUR and a barely perceptible rise against USD.
However, it’s a big week for the UK’s economy as the battle lines are drawn between those trying to limit inflation and those determined not to see their incomes damaged by it. That will be influenced by tomorrow’s inflation data for the UK, expected to exceed 9%.
A potential “Summer of Discontent” starts in the UK today with the largest rail strike for several decades, in demand for – among other things – higher wages due to higher inflation. The Bank of England’s chief economist Huw Pill told Bloomberg last week that the Bank was watching closely: “If we see greater evidence that the current high level of inflation is becoming embedded in pricing behaviour by firms, in wage setting behaviour by firms and workers, then that will be the trigger for this more aggressive action.”
Several members of the Monetary Policy Committee are speaking this week, just as the inflation figures are released, so be prepared for market movements.
In France, President Macron suffered a major setback, losing his majority in the French assembly and most likely his chance to bring in serious reform to France’s business culture.
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