Excel Currencies Blog

Chancellor Reeves pushed Sterling lower yesterday during her speech in Parliament. GBP v EUR fell to its lowest level since September 9th & GBP v USD hit a 9-month low..

Reeves skirted any commitment to reining in fears over the sustainability of UK debt dynamics and confirmed the government would continue to stick to the UK's debt rules. 

Sterling is firmly in an oversold situation. However, until the Chancellor bites the bullet on spending, the Pound will unlikely break-free of the fiscal shackles and confidence in £ will not return.

Some respite has arrived this morning though as UK inflation for December unexpectedly fell from 2.6% to 2.5% (2.7% expected). More importantly, core inflation beat estimates (3.2% down from 3.5%) and service inflation fell from 5% to 4.4%.

This has pushed UK bond yields down, easing the pressure for now on the straining environment. Plus, it has opened the door to a possible 25bp interest rate cut next month.

Please get in touch if you would like suggestions on what to do over the next few weeks or to learn what others have already done during this hypersensitive time for GBP.