Since the UK’s inflation release yesterday, The Pound has had mixed reactions against both EUR & USD. Usually stronger than expected inflation would see the currency strengthen as it incentivises outside investment. But the reaction has seen The Pound initially drop off by half a percent, before recovering ground. Against the Dollar, we had seen The Pound dip below 1.34 briefly before recovering again.
It looks like investor sentiment is slightly cloudy as bonds fell yesterday with yields rising which would usually see investors taking advantage of this opportunity which in turn would generally support Sterling. These market breakdowns, or a lack of confidence have happened before, most notably in January when markets were concerned about the UK’s debt situation. The rising yields in The UK poses a problem in the sense that the UK government now face higher refinancing costs which raises further questions about the sustainability of the debt repayments.
GBP/EUR 1.1848 GBP/USD 1.3386 GBP/AED 4.9198
GBP/AUD 2.0838 GBP/CHF 1.1057 GBP/CAD 1.8587
GBP/NZD 2.2672 EUR/USD 1.1286 GBP/ZAR 24.1298