This morning we see UK inflation at a new 30 year high with the intensifying costs of living being seen across all households. Consumer prices rose by 5.5% in the 12 months up to January 2022. This is up 0.1% from December last year and the last time we saw inflation higher was in March 1992. High energy costs have continued to grab the headlines this year but prices have increased across the board with clothing, household goods and footwear to name a few. The Bank of England have warned that we could go as high as 7.25% by April 2022. This will continue to put pressure on the Bank of England to hike interest rates again. Current predictions have the Bank of England’s base rate at 1.75% by the end of the year.
We start the day with GBP/EUR trading at 1.1930, up 0.7% week on week. The pound has also slightly outperformed the US dollar at 0.2%, however the ongoing uncertainty surrounding Russia’s intentions in eastern Europe should continue to produce volatility across the board. News yesterday of a partial Russian withdrawal from the Ukraine border allowed the market to rally if only for a short while with GBP/EUR getting up to 1.1950 and GBP/USD up to 1.3567. Investors will continue to look for safe haven currencies if the ongoing tensions continue giving the US dollar support.
Have a good day.
Josh Saunders, Senior Relationship Manager.
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