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Weekly Roundup: Pound fluctuates as UK inflation climbs to new 40-year high

currency-newsWeekly Roundup: Pound fluctuates as UK inflation climbs to new 40-year high
The pound ticked higher at the start of last week, bolstered by comments from Bank of England (BoE) policymaker Catherine Mann as she made the case for the bank to hike rates more aggressively in the future.

But Sterling was unable to hold on to these gains for long, with GBP exchange rates sliding amid fresh fears over the UK’s economic woes.

The pound then fluctuated wildly on Wednesday with the publication of the UK’s consumer price index.

While May’s CPI figures reported inflation climbed to a new 40-year high, the latest acceleration in price growth was far more modest than the surge reported in April.

Coupled with a dip in core inflation, this saw GBP exchange rates weaken as it undermined BoE rate hike expectations. 

The release of the UK’s latest PMI releases helped Sterling to stabilise on Thursday.

However the pound faced another setback at the end of the week after the UK’s latest retail sales figures reported sales growth contracted in May.

With UK data thin on the ground this week we may see UK political concerns act as the main catalyst of movement in the pound.

The Conservative party’s recent byelection losses are likely to stoke uncertainty over Boris Johnson’s premiership, while fresh Brexit jitters could weigh down GBP exchange rates.

Elsewhere we are likely to see Sterling sentiment influenced by a speech from BoE Governor Andrew Bailey on Wednesday. Will a hawkish outlook from Bailey help to buoy the pound?
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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