Having dropped 1% on Monday, sterling made some attempts to climb back again yesterday. However, it all remains uncertain for exchange rates as multiple factors weigh in, including the rise of Covid in China (where only 38% of over-80s are fully vaccinated) and its effect on the global economy.
Meanwhile central bankers continue to wrestle with rampant inflation.
Or is it so rampant? Within the eurozone, while members of the European Central Bank’s rate-setting committee were making speeches warning that sharp interest rate rises must continue, to beat inflation, they were somewhat undercut by actual inflation data from Spain and Germany that was below expectations. Indeed, in Spain prices fell in November. French inflation has also just been revealed to be marginally below expectations at 6.2%.
Reading the business pages of newspapers, there’s a clear sense that no-one really knows what is going on with inflation, but a new generation of economists are thoroughly enjoying studying it and the data surrounding it. All sorts of theories are being discussed anew. Such as, is the wage-price spiral really a thing? Maybe not. Even, is recession really a price worth paying to get inflation down, or should central banks be happy with 3% inflation or more these days?
Everybody is being hit in different ways by inflation. One interesting fact is that while Spanish and French inflation is at 6 to 7%, British retirees living there will get a pension increase in line with British inflation of 10% or more. Every cloud seems to have a silver lining.
If you’re considering making that move, in a world where no-one really knows what is going on, what comes next or how to take control, at least locking in your exchange rate will offer some certainty. You can do that with a call to your trader on 020 7898 0541.
Also, a reminder that we have doubled the usual referral bonus to £50 for an individual and £200 for a business, so if you know anyone who could use our services, do go ahead here.
