The last 24 hours has been a tale of two sets of inflation figures.
The US’s were higher than expected at 8.3% and led to a spectacular fall for most currencies against the dollar yesterday as the likelihood of a large interest rate increase next week rose.
The UK’s inflation rate was not only lower than expectations, but returned to single digits at 9.9%. It is still at around a 40-year high, and is much higher than the US, Germany and the eurozone as a whole, so currency investors haven’t reacted much either way and GBP/EUR remains where it was yesterday. That is around one cent stronger than the worst of the week and one cent below the best, but still an excellent rate when viewed in the overall post-Brexit context.
However, the fall of every currency against the US dollar shows how fast the world of finance can turn. Over the space of a few minutes sterling lost nearly 2%, the euro 1.6% and the Australian dollar 2.5%.
This is the kind of hair-trigger, nervy world that currency markets are operating in and your finances are subject to, unless you take action.
Should that be repeated for GBP/EUR during the property-buying process, a €200,000 property will instantly cost several thousand pounds more. That can, of course, be avoided with a forward contract, so do please call your trader on 020 8003 4915 to discuss removing that risk.
Inflation was the third of the big data releases this week, and the fourth lands tomorrow at 7am, retail sales.
Finally, a reminder that the end of September is the deadline for our summer referral bonus, with a draw for £2,000 worth of flight vouchers available if you can refer a friend. You can start that here.
