020 7898 0500Sterling fell to its lowest mark against the dollar since September 2017 yesterday. The slide came following the news that inflation held steady in June. It had been expected to jump to 2.6% from 2.4% the month before, which would have supported expectations that the BoE would increase interest rates when it convenes in August. With inflation at 2.4% and wage growth slowing, it is becoming increasingly difficult for the central bank to justify hiking rates.
Today we will see retail sales data for June which are expected to have dipped from the month before. If that proves to be the case then we could see some further sterling weakness. To boost expectations of a rate hike in August, we need some extremely positive data from the UK and evidence that the economy is faring better than previously thought. Yesterday’s events serve to highlight how quickly things can change and why removing the inherent risks of having foreign currency exposure makes sense – especially in the times we are currently living in.
