Unemployment falls but Pound struggles

By Luke Dyson

For the last week we have seen very limited traction for sterling against the euro, with the market now in a 1 cent range, making no progress at present in either direction.

The pound is holding the strength it does have after it has been announced wages across the UK have risen significantly quicker than predicted to combat inflation, but also unemployment levels have fallen to the lowest since 1974. With this being said it is putting increasing amounts of pressure on the Bank of England to reduce inflation by raising interest rates.

It is expected that they will raise interest rates by 75 basis points on the 22nd of September, if they fail to get inflation under control with these rate hikes it is very plausible that sterling will begin to decline, as the cracks in the UK’s economy begin the appear.

For sterling to dollar in the last week we have seen a significant amount of volatility, with the market dropping yesterday over a cent in a couple of minutes.

This was off the back of US inflation figures being higher than expected by 0.3% for CPI month on month, But also 0.2% higher than expected for the year.

This will now put pressure on the Federal Reserve to raise interest rates in an attempt to combat this unexpected price jump.

Following on from this the dollar made significant  gains against all the G10 currencies.

With the UK’s current inflation problem and heightened volatility across the market, it is not particularly looking great for sterling moving forward for the weeks and months to come.

If you have an up and coming currency requirement please consider taking advantage of the current rates as these could be drastically different as the inflation issue continues to progress.

Please get in contact with your currency consultant today to see how you can limit your currency exposure or even take advantage of the current rates.