The Pound has had one of its best performing weeks of the year so far hitting 1.15 on Thursday after the Bank of England announced a 7-2 split in favour of keeping interest rates on hold in the UK.
Inflation is still way above the target of 2% and although we have seen it falling recently this still causes a big concern for the central bank as one of their main responsibilities is to control inflation levels.
With average earnings this week outpacing inflation levels for the first time in a long time this has given the Pound a much needed boost against the single currency.
As average earnings are increasing and unemployment has fallen this is likely to help push up both Retail Sales and UK GDP in the future.
Next week the latest revision of GDP for the final quarter of 2017 is due to published so if this is revised up I think we could see a strong end to the month for the Pound vs the Euro.
Although inflation has fallen, as average earnings are strong combined with low levels of unemployment this could put pressure on the Bank of England to look at raising interest rates.
The central bank last raised interest rates prior to the end of the year to push rates back up to where they were prior to the EU referendum. At the moment there is a strong chance of another rate hike coming potentially by May and this is another reason for the increase in the value of the Pound vs the Euro.
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