The Pound crashes against the Euro after UK inflation worries (Tom Holian)

Pound Euro exchange rates have fallen by over 3 cents in the course of a week after the UK has shown concerns about rising inflation over the last few days.

Typically, rising inflation results in strength for the currency involved as it often means that the central bank will look at raising interest rates.

However, what is evident in recent years is that both the Bank of England and the European Central Bank are very unlikely to be raising interest rates in the near future and monetary policy has adopted Quantitative Easing instead of the more traditional cutting and raising interest rates.

With inflation rising in the UK as displayed in last Thursday’s Quarterly Inflation Report and this morning’s Consumer Price Index, tomorrow morning’s UK unemployment data combined with UK Average Earnings could have a big impact on Sterling exchange rates over the next 24 hours.

Although unemployment has been falling to its lowest level in years in the UK at the same time Average Earnings have also been falling.

Essentially this means that although more people are in work their disposable income is less which is a concern for the British economy and also the Pound.

Earlier today the Eurozone confirmed a larger than expected Trade Balance as well as positive GDP figures so things appear to be going the right way on the continent at the expense of Sterling.

Closely following the UK unemployment data tomorrow the Eurozone will release its own set of inflation figures and could this stop the Euro in its tracks vs the Pound if inflation is also high in Europe?

On Thursday UK Retail Sales are due to be published and as they have been relatively mixed during the last few months could this help boost the Pound?

If you have a currency transfer to make and would like further information or simply a free quote then contact me directly and I look forward to hearing from you. Working for one of the UK’s leading currency brokers I am confident of being able to offer you a better deal when buying currency.

Tom Holian [email protected]