020 7898 0500Following a good end to last week for sterling, the run continued into Monday and Tuesday. Inflation figures released yesterday morning confirmed it had jumped to 2.9% in August from 2.6% in July. The pound rallied in response as speculation of a tightening of monetary policy seeped into the City.
Sterling reached a one-year high against the US dollar and a six-week high against the euro. It makes for a fascinating Thursday, when the BoE will convene to discuss future fiscal policies. While no interest rate hike is expected at this meeting, it will be interesting to see what tone Governor Carney takes when he speaks and what the voting numbers are (The MPC voted 6-2 last time). It’s worth bearing in mind that inflation is still outpacing wages – which are currently rising by 2.1%, so the British public are still experiencing a cost of living strain.
The chart below shows movements between GBP and USD from the day before the EU referendum result to today. While the pound has made some significant gains against the dollar in recent times, it is still worth 10% less than it was in June 2016.
