• Home
  • Blog
  • Sterling Slides After Uk Inflation Softer Than Forecast

Sterling slides after UK inflation softer than forecast

A BoE interest rate rise tomorrow drops from an 80% chance to under 50%..

Let's start with the positives then and both the core inflation and inflation rate in the UK for August was down. The more important core inflation figure saw a sizeable decrease from 6.9% to 6.2%, after barely moving in recent months. Good news for our pockets, but this was the reason for money markets to dent the chances of a rate hike tomorrow.

That's not to say that won't happen though, as many still expect a 25bp rate rise. But with the core number now making a more significant drop, any further interest rate rises are could be off the cards. This is seen as negative for GBP, as higher interest rates support a higher currency value.

So, we have a 50-50 outcome for tomorrow and seeing as the Pound is on the back-foot currently, this is a 'more to lose than to gain' scenario for £ sellers. GBP v EUR has lost €2,200 on a conversion of £100,000 in just 1-month now with $3,600 lost on the same figure where GBP v USD is concerned.