By Luke Dyson
Following on from last week’s trading we have seen sterling strengthen across the board, with GBP being the best performing major currency from the beginning of December.
This was off the back of a speech from Jerome Powell from the US federal reserve that validated expectations for a slow down in the future rate hikes. Jerome Powell confirmed interest rates were still on their way in the near future as US inflation is nowhere near under control as of yet.
This will likely be a 50 Basis point hike later this month, which is a slight drop from previous 75 BP hikes previously.
These gains made by sterling however may be limited due to negative data releases within the UK’s economy. With the final manufacturing PMI reading to end November being confirmed as a contraction in this sector as factories struggle to cope with rapidly rising prices.
Also a sharp decline in house prices to end November with another drop by 1.4% , which is the sector’s largest price drop since June 2020.
This also hints to the fact the UK’s cost of living crisis is only going to get worse with UK food price inflation reaching new highs of 12.4% at the end of November as well.
If you are looking to buy a major currency with sterling in the next few weeks/ months, do consider locking in at current rates, as these could potentially be short lived as inflation continues to climb into the new year.