The Bank of England looks set to put more quantitative easing in motion next month, as price pressures in Britain ease up.
Peter Lavelle at foreign exchange specialist Pure FX
18.01.2012
Exchange Rate Changes:
Here is a table of the gains in currency you could have achieved in the past month, trading at the high compared to the low:
GBPEUR: +2.085%
GBPUSD: +1.694%
GBPCHF: +1.821%
GBPAUD: +0.606%
GBPNZD: +0.697%
GBPCAD: +1.303%
USDEUR: +3.48%
Core UK inflation drops to 4.2%
The latest inflation figures have been unleashed upon a waiting world then, and reveal that the core CPI dipped to 4.2% last month. This marks the third decline on the trot since September when CPI inflation reached a hair-raising 5.2%, and should of course come as welcome relief to squeezed families. But easing price pressures (and so perhaps an ensuing boost in retail sales) are not the only thing to expect from this inflation data.
In addition, it means the Bank of England can rest easier about launching a third round of quantitative easing, which it is expected to do next month. (Flooding the markets with cash tends to compromise the value of a currency, so it is of course that last thing you want to do when inflation is already soaring.) Of course, given the less than inspiring data to emerge in recent weeks (including a decline in business confidence from Conference Board) the BoE might well have ramped up its printing presses regardless. This has in fact been widely predicted. However, falling inflation can let governor Mervyn King feel more confidence that he is adopting the right course.
EFSF holds successful bond auction
In Europe meanwhile, the EFSF rescue fund enjoyed storming demand and barely-there interest rates during its bond auction last night. Investors bought up $1.5bn in bonds from the Eurozone firewall at yields of just 0.2664. This is in spite of the fact that S&P downgraded the EFSF just the day before, slashing its gold-plated AAA to AA+. Of course, European politicians took the result and ran, arguing that it demonstrates investors have renewed confidence in Europe solving its debt problems. This could be the case. But on the other hand, is it not also possible that confidence in Europe has hit rock bottom, and this is the result?
Coming Up:
Wed 18th 09.30 UK unemployment rate
Wed 18th 14.15 US industrial production
Thu 19th 09.00 EMU ECB monthly report
Thu 19th 15.00 US Phil Fed manufacturing index
Fri 20th 09.30 UK retail sales
To find out more useful information that can help with your exchange rates, get in touch on +44 (0) 1494 671800 or email enquiries@purefx.co.uk. We’d be delighted to help maximise your currency transfers!
18 January 2012
BoE to ramp up quantitative easing as inflation heads south
The Bank of England looks set to put more quantitative easing in motion next month, as price pressures in Britain ease up.
Peter Lavelle at foreign exchange specialist Pure FX
18.01.2012
Exchange Rate Changes:
Here is a table of the gains in currency you could have achieved in the past month, trading at the high compared to the low:
GBPEUR: +2.085%
GBPUSD: +1.694%
GBPCHF: +1.821%
GBPAUD: +0.606%
GBPNZD: +0.697%
GBPCAD: +1.303%
USDEUR: +3.48%
Core UK inflation drops to 4.2%
The latest inflation figures have been unleashed upon a waiting world then, and reveal that the core CPI dipped to 4.2% last month. This marks the third decline on the trot since September when CPI inflation reached a hair-raising 5.2%, and should of course come as welcome relief to squeezed families. But easing price pressures (and so perhaps an ensuing boost in retail sales) are not the only thing to expect from this inflation data.
In addition, it means the Bank of England can rest easier about launching a third round of quantitative easing, which it is expected to do next month. (Flooding the markets with cash tends to compromise the value of a currency, so it is of course that last thing you want to do when inflation is already soaring.) Of course, given the less than inspiring data to emerge in recent weeks (including a decline in business confidence from Conference Board) the BoE might well have ramped up its printing presses regardless. This has in fact been widely predicted. However, falling inflation can let governor Mervyn King feel more confidence that he is adopting the right course.
EFSF holds successful bond auction
In Europe meanwhile, the EFSF rescue fund enjoyed storming demand and barely-there interest rates during its bond auction last night. Investors bought up $1.5bn in bonds from the Eurozone firewall at yields of just 0.2664. This is in spite of the fact that S&P downgraded the EFSF just the day before, slashing its gold-plated AAA to AA+. Of course, European politicians took the result and ran, arguing that it demonstrates investors have renewed confidence in Europe solving its debt problems. This could be the case. But on the other hand, is it not also possible that confidence in Europe has hit rock bottom, and this is the result?
Coming Up:
Wed 18th 09.30 UK unemployment rate
Wed 18th 14.15 US industrial production
Thu 19th 09.00 EMU ECB monthly report
Thu 19th 15.00 US Phil Fed manufacturing index
Fri 20th 09.30 UK retail sales
To find out more useful information that can help with your exchange rates, get in touch on +44 (0) 1494 671800 or email enquiries@purefx.co.uk. We’d be delighted to help maximise your currency transfers!