Sterling has been boosted by this morning’s news that inflation has fallen again, to 3.2%, but not the 3.1% that the markets had expected.
As we highlight in the brand-new Quarterly Forecast, out today, while this is positive for sterling in the short term as it means the Bank of England (BoE) is less likely to cut interest rates as quickly, high interest rates are a severe brake on the economy. Read more in the new forecast, along with predictions from leading banks on exchange rates over the next three and 12 months, when it is released later today (watch out for your inbox around midday).
So, this morning’s news: short term, good for the pound; long term, probably bad for the pound. If that sounds like a good day to fix your rate – currently at its strongest against the euro for well over a month and not far off its best for 20 months – call your trader on 020 7898 0541.
We’re going to have half of the BoE’s interest-rate setting panel the Monetary Policy Committee (MPC) speaking over the next two days, starting with governor of the BoE Andrew Bailey this afternoon. Then there will be retail sales data for the UK on Friday. Monday’s retail sales for the US showed a surprising spike in March, but will the same be true of British consumers?
Either way, today’s elevated rate for sterling may not stick around for long.
