Sterling Trades Lower on Inflation Reports

Daily Currency Update

GBP - British PoundSterling traded lower yesterday due to only mild improvements in inflation and renewed talks on negative interest rates. CPI fell to -0.2% for January achieving a rate of 0.7%, a far cry from the 2% target set by the Bank of England. Which is why negative interest rates are still being spoken about. Bank of England Deputy Governor Ramsden did comment that quantitative easing or bond buying is their favoured route. GBPEUR still managed to test fresh highs yesterday, breaking above the €1.15 handle for a short period of time. Monday’s announcement by British Prime Minister Boris Johnson could potentially cause volatility in Sterling. Covid-19 infections have reduced significantly over the past few weeks and this is mounting pressure on Johnson to ease the current lockdown measures. A survey completed by YouGov does paint a very bleak picture of the UKs job market, with 2.6 million or 8% of workers expecting to lose their jobs in the next 3 months. This goes against most forecasts that the UK economy is a ‘coiled spring’ waiting to explode once the virus is under control. All eyes now turn to UK retail sales on Friday, however it is expected to be bad news for the Pound with -3% forecasted for the month.