Inflation Drops Further

By Ashley Finill

This morning the Office of national statistics in UK released the inflation figure for this month, the figure came at 3.2% down from last months reading of 3.4%, which is the weakest level for two and a half years. Food prices were the main reason for the drop as prices are rising less than they were a year ago and also fuel price hikes are also starting to slow down, and although this is positive for the UK economy as the cost of living should be starting to ease, this month’s 3.2% inflation posting isn’t as low as expected as economists were expecting 3.1%. After inflation was announced Sterling received a slight nudge up against the euro, although the gains were marginal with under half a cent movement against the single currency. Sterling also gained around half a cent on the strong US Dollar. These gains could be short lived for the Pound as at 9am the Eurozone also announce their inflation figure for the month, the figure is expected to remain at last month’s reading of 2.9%, should this figure not be correct we are likely to some activity in the currency market.

Inflation Key to Banks Rate Cuts

The Bank of England Governor Andrew Bailey spoke ahead of the inflation announcement and has hinted that the BoE could cut interests rates in the UK as early as June. Over the past 2 years rate hikes have been Sterling’s support against the majors so should the UK be first to strike for a cut could spell bad news for Euro and Dollar buyers. The European Central Bank held their meeting last week and opted not to cut interest rates this month but could cut in the next meeting which gave Sterling a nice boost against the Euro, but those gains could be reversed should the Governor Mr Bailey take decisive action and cut interest rates for the first time in 2 years on Thursday 9th of May. Should you have currency requirement for deposits or property completion before and after the 9th it may be prudent to speak to your currency consultant to discuss your options and take advantage of today’s highs, should there be more solid talk of interest rate cuts in the UK Sterling could be the loser to any action taken. We have different contract types that can protect you from any surprise drops in the currency market, like our forward contract option, where with just a 10% deposit can secure all your currency needed for your property purchase, giving you peace of mind that you won’t be caught out should the rate go against you, speak to your consultant today for more information.