British Pound (GBP) Exchange Rate: Sterling Forecast to Recover Losses Tomorrow
The Pound’s impressive run of gains came to an end today and the British currency slipped against the majority of its most traded currency counterparts.
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Two factors piled pressure on Sterling during European trading.
Firstly, Bank of England official David Miles intimated that not all members of the Monetary Policy Committee were in accordance regarding how much spare capacity the UK economy has.
Miles also said that he isn’t sure that the UK will ‘get a strong bounce back in growth of productivity’ adding that the central bank doesn’t ‘see a case for tightening [easing] right now’.
The Pound then moved further away from its recent four-year high against the US Dollar and year-high against the Euro as UK inflation was shown to have fallen below the Bank of England’s 2 per cent target for the first time since the tail end of 2009.
Inflation unexpectedly dropped to the BoE target level in December and rather than remaining unchanged, as expected by economists, the pace of consumer price rises slowed to 1.9 per cent, year-on-year.
Month-on-month CPI declined by 0.6 per cent.
Separate data showed that UK factory gate prices increased by 0.9 per cent year-on-year rather than the 0.7 per cent expected.
The Pound may recover some losses overnight as investors focus on tomorrow’s UK employment figures.
For the last few months the UK’s labour sector has offered positive data surprises and another upbeat result could boost the Pound.
Economists are expecting the unemployment rate to hold at 7.1 per cent in the three months to December and the number of jobless claims to have fallen by 20,000.
The publication of minutes from the Bank of England’s latest policy meeting could lend Sterling additional support.
The Pound is currently trading against the US Dollar in the region of 1.6697 and trading against the Euro in the region of 1.2161.