Sterling starts the week still strong against the US dollar, after reaching its highest point for over a year last week. Against the euro it has slipped back again from last week, but remains well above the average of the past year (and, indeed, the past five years).
This week, as last, will be all about the inflation data, which comes out in the UK on Wednesday. It was last week’s US inflation data that sunk the dollar, showing a huge drop to just 3%. Will the same happen here? Certainly the government and Bank of England will be praying for a large fall in inflation from the current 8.7%.
While positive economic data is generally good for a currency, inflation is a bit different and the public and government’s benefit from lower inflation could easily hit your exchange rate. So why not lock in today’s excellent rate with a forward contract? You can do that with a call to your trader on 020 8108 5163.
Of course, being economics it’s not quite as simple as that. Different economists view different sets of data to draw a conclusion, and indeed the Bank of England’s chief economist Huw Pill recently admitted that the models they have been using to predict inflation have been giving them the wrong information.
Like I always say, no-one really knows anything, and any forecast is essentially guesswork. Which is why at Smart Currency we strongly advocate just focusing on you own plans. When the exchange is at a level where you can afford to fulfil your own big plans, just lock it in and take the stress of worrying about money away.
