The Pound has had a difficult week against the Euro and we could be in for a very volatile day tomorrow.
Inflation in the UK published yesterday showed a fall from the expectation of 0.7% to 0.6% which caused the Pound to fall against the single currency.
If inflation continues to fall then we could see the Bank of England looking at cutting interest rates again but I would be surprised to see any change at tomorrow’s meeting.
The interest rate cut recently was mainly done in order to combat the problems caused by the uncertainty of the Brexit vote and Bank of England governor Mark Carney has reassured the markets recently that what they did helped to stabilise the British economy.
The Bank of England minutes will also be published after the report tomorrow and it will be important to see if there is any further appetite for another rate cut in the near future.
If there is we could see the Pound have a difficult day tomorrow.
However, tomorrow also sees the release of Eurozone inflation which has been struggling for many months.
The estimate is for 0.2% year on year and if this shows more worrying signs then it could provide evidence that the monetary easing done previously by the European Central Bank may not be having the desired effect.
Therefore, we could see some big swings for Sterling vs the Euro during tomorrow’s trading session.
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