UK inflation softer than expected in March, still an 80% chance of BoE rate cut next month..
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| The headline inflation figure for the UK in March dropped to 2.6%, down from 2.8% the previous month with the more important core inflation number also dropping from 3.5% to 3.4%. The readings were more or less in line with estimates and they are likely to be the lowest we see for some time.
More importantly, GBP v EUR has hit a 1-week high after bouncing back a huge 2-cents in just 3-days. This proves the pair was in deep overbought territory as expected, however, what happens next with the pair is still very much uncertain.
In a hypersensitive environment such as this, you need to expect the unexpected and swallow the hyper-volatility that comes with the territory if you are not forward buying what you require to exchange until such times erode.
We believe the current trading range to be between £-€1.14-1.18 mid-market, heavily downgraded from the past 9-months or so.
For GBP v USD, it is one of the best times in 3-years to exchange and so banking the profit now makes sense to us. That being said, further gains could easily be found in the weeks ahead.
Supposedly, the UK-US are close to a trading agreement and the US are in talks with 15 other countries to negotiate better deals. The outcome to the Japanese meeting is important to the world and that starts today. China could soon be at the table too or Trump may force countries to choose between the US and China and that would create financial market Armageddon.
Over to the ECB tomorrow.. |
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