UK Inflation

The Pound has spiked higher this morning (17/05/11) following the release of higher than expected UK inflation data. The Consumer Price Index was up month on month at 1.0% and up year on year at 4.5%, compared to 0.3% and 4.0% respectively last month. UK inflation remains stubbornly above the 2% target and the Bank of England has suggested it could reach 5% before falling back in 2012.

Continued high inflation readings increase the probability of interest rate hikes from the Bank of England. Typically, as a central bank increases interest rates their currency will appreciate as global investors seek a higher yielding currency.

The Pound is up on the interbank market against the US Dollar at 1.62, against the Euro the Pound trades at 1.14. Please note the rate you are able to achieve will depend on the amount of currency being purchased. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.