Inflation and Wage data will be a key factor in Sterling value
Yesterday saw the release of unemployment and average wage growth. The figures were widely anticipated due to the correlation with inflation. Inflation has seen a rapid rise, currently sitting at a worrying 2.9% . The increase is direct result of the vote to leave the EU, with Sterling so weak imports have become more expensive and the price increase is now being passed on to the consumer. This is fine providing people continue to spend, if they don’t there is potential for a recession.
Unemployment came in at an impressive 4.5% the lowest levels since 1975 and was followed by average earnings that came in at 2% up from 1.8%. This was a catalyst for Sterling strength against the Euro, but the average wage increase is still significantly behind inflation which could cause a drop in consumer confidence. Inflation data released next month has the potential to cause high levels of volatility on GBP/EUR. If we see a further rise above expectations expect the pound to suffer.
Another catalyst for the Sterling spike was Bank of Italy Governor and member of the European Central Bank’s (ECB) Governing Council Ignazio Visco commenting that the bank’s monetary stimulus policies need to remain in place. Visco’s speech indicates that interest rates are likely to remain at current low levels and stimulus will remain high for the foreseeable future.
If you have a large currency transfer to perform in the coming days, weeks or months then I will be happy to speak to you directly as I will be willing to help you both with trying to time a transaction and getting you the best possible rate when you do come to trade. A small improvement in a rate of exchange can make a significant difference so for the sake of taking a few minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can contact me (Daniel Johnson) on email@example.com and I will endeavor to get back to you as quickly as possible. Thank you for reading.