Excel Currencies Blog

Most huge events currently happening in the market are £ positive..

Financial markets are hot right now with significant data being released daily at this moment in time. The market was gearing up nicely for the Fed this afternoon, but UK inflation numbers this morning have swooped in and created havoc amongst traders.

Economists have been updating their views on what central bankers are going to be doing with interest rates near-term after the recent bank fall-outs. Many have been predicting lower hikes and an ending to the current cycle paths for all central banks. However, recent UK inflation data points to the BoE not doing near enough to curb rising costs.

A result of 10.4% beats last month's 10.1% figure and stops the recent steady decline of inflation. Core inflation (the key number really for the BoE) also surged to 6.2% from 5.8%. It means the BoE have grossly underestimated the inflation scene thus far and more needs to be done.

The higher interest rates are, the stronger the relating currency is. It puts GBP in a strong position once again to consolidate at current levels, that are higher than pretty much all analyst predictions. For 2-weeks the Pound has been performing strongly due to circumstances that affect more the EU/€ & US/$ than it does UK/£. Let's see what the Fed does/says later today ahead of the BoE meet tomorrow, but no doubt volatility will remain elevated for the rest of the week.