Currency Note

Pound strong ahead of inflation data

By Alex Bennett January 17th, 2022

The pound is still strong against the euro and the dollar this morning ahead of UK inflation figures for December, which are expected to be released on Wednesday. If the figures come in higher or lower than expected, sterling could be impacted.

Following inflation data, retail sales figures will be released for the UK on Friday, which will show how the sector performed in December.

News on falling cases of the Omicron variant in the UK is also supporting the pound. Experts warn that this is “cautiously good news” and that an extra week of data will be needed to confirm that this wave is slowing down.

After reaching a two-month high against the dollar last week, the euro could be impacted by final inflation figures for the eurozone on Thursday, as well as economic sentiment figures tomorrow.

Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Trader on 020 7898 0500 to get started.

GBP: Inflation figures expected on Wednesday

The pound is still trading around strong levels against the euro and the dollar this morning, holding onto gains made in early January.

This week, inflation figures for the UK will be released. Inflation is expected to increase year-on-year but decrease month-on-month. If it rises or falls more than expected, then sterling could be impacted. This could also have a bearing on the Bank of England’s next interest rate decision, which will take place on February 3.

Employment figures will also be released for the UK today. The unemployment rate for November is expected to stay the same at 4.2%.

GBP/USD chart over past year

From To


EUR: Economic sentiment figures due for Germany and eurozone

The euro is gathering some strength against the dollar this morning. It’s a quiet week for data in the eurozone, but economic sentiment figures will be released tomorrow followed by final inflation figures on Thursday.

Economic sentiment is expected to have improved slightly in January for Germany, despite restrictions still being in place across the country.

Eurozone inflation is expected to come in at 5% year-on-year, with core inflation at 2.6%. There will also be speeches from European Central Bank officials on Friday, including President Christine Lagarde.

USD: Dollar still weaker following economic data

After weakening at the end of last week due to Wednesday’s inflation figures and poor economic data on Friday, the dollar is trading around similar levels this morning.

It’s a fairly light week for data in the US, with existing home sales figures due on Thursday, as well as initial jobless claims.

The Omicron variant of COVID-19 is still taking its toll in the US, with at least 80% of hospital beds occupied across 24 states. The south has been hit the hardest by the new variant, with record case numbers still being reported.

For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business trader on 020 7898 0500 or your Private Client trader on 020 7898 0541.