Currency Note Sterling

How will todays inflation report affect sterling?

By Callum Holmes February 12th, 2015

A mixed day for sterling saw it reach a fresh 7-year high against the euro in the morning, before falling away against both the euro and US dollar as the afternoon progressed. With no major economic data released yesterday, market sentiment proved to be the main driver. The initial strength seen in the morning appeared to be thanks to lingering support from recent strong UK data, whilst uncertainty over the tone of today’s inflation report from the Bank of England (BoE) prevented sterling from extending its gains further – on account of concern that the report may contain a significantly reduced inflation forecast.

Mixed messages coming from the ongoing Eurogroup meetings saw the euro recover throughout the afternoon, although sterling still managed to end the day in a positive position against the single currency.

Today’s latest inflation report from the BoE will provide insight into their economic growth predictions over the next two years, and the accompanying press conference from Governor Carney is likely to increase market movement further as investors react to his words.