Much of the world may be winding down for Christmas, but for the business world and economic data this is a busy week.
For the UK, the week will be dominated by the inflation reading on Wednesday morning and then, just as people throng to the shops for last minute gifts and the turkey, retail sales on Friday.
The Bank of England is looking for clear signs that inflation is beaten, with UK prices currently rising at 4.6%, considerably faster than most other major economies including the USA (3.1%), Germany (3.2%) and France at 3.5%. Even our prime minister’s new best friend Georgia Meloni in Italy has inflation down to below 1%.
The pound is currently riding high, still close to three-month highs, but its recent strength has been entirely based on the Bank of England continuing to not only keep interest rates high, but even raise them, as a third of the Bank’s interest-rate-setting committee voted for last week.
That’s why this week is so critical and why the pound’s strength will be in so much peril if inflation suddenly looks beaten.
Hence, ahead of the first of those readings, in less than 48 hours, if you are committed to a large transaction overseas, it would be prudent to call your trader on 020 8108 5163 and at least discuss the benefits of fixing your rate with a forward contract.
