UK inflation figure to go unnoticed as investors focus on negotiations
|After printing a new multi-month high on Monday, the pound sterling has stabilised gains at around $1.3785. Since the beginning of the year, the pound sterling and the single currency have been moving side by side, suggesting that the market was more focused on the Trump situation rather than the divorce between the EU and the UK. In our opinion, Brexit risks are currently underestimated and investors seemed to have forgotten that the EU has the upper hand and is currently taking a tougher stance on transition talks.
December inflation figures are due for release this morning. No major surprise is expected: the headline measure should eased to 3%y/y from 3.1% in November. The core measure, which excludes the most volatile components, is anticipated to come in at 2.6%y/y, down from 2.7%. Despite the improving inflation outlook, there is little chance that the BoE would step in any time soon as only two to three hikes are expected over the next 36 months. Therefore, we remain cautious regarding further GBP appreciation.
Stay on top of the markets with Swissquote’s News & Analysis
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.