Rising Inflation and the problems for the Pound vs the Euro (Tom Holian)

Sterling has ended the week at its lowest point against the Euro as the economic data recently published in the UK has thrown up a few concerns for anyone looking to buy Euros with Pounds.

The real concern for the UK is that of inflation which appears to be rising at the moment. This was confirmed with last week’s Quarterly Inflation Report which caused the Bank of England to cut the growth forecast from 2% to 1.9%.

Even unemployment figures released on Wednesday did little to support the Pound.

Indeed, the figures showed the lowest level of unemployment seen in 45 years and with average earnings also their best in the last 3 years the problem is that inflation is rising which is increasing the cost of living in the UK which is detrimental to the Pound.

Therefore, although there are more people in work the real issue is that the costs of goods and services are outstripping inflation.

Retail Sales yesterday morning came out a lot higher than expected and this gave the Pound a brief lift vs the Euro but the gains were short lived.

We are now less than 3 weeks to go before the UK’s general election and it appears as though the Tories are going to be convincing winners as demonstrated with the recent local elections.

It could be argued that a Tory win has already been priced in as we saw a rise in the value of Sterling when the general election was announced in April so although typically a win for the existing government would provide an increase in the Pound I think as it’s been expected it may not provide the lift that some may expect.

Therefore, if you have a currency transfer to make and would like to save money when buying or selling currency compared to using your own bank then contact me directly.

Working for a leading currency broker I am able to offer you bank beating exchange rates so drop me a quick email and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk