UK inflation figures tomorrow

Tomorrow marks an important day for Sterling exchange rates. The latest consumer price index (inflation) data is set to be released, with the markets largely expecting a cooling after inflation peaked in December at 3.1%. This is a key level for the Bank of England; any higher than this would put and the pressure on Bank of England to write a letter to the Chancellor of the Exchequer explaining the steps that are necessary to combat high levels on inflation. If anything, this would most likely result in Sterling gaining across the board in my opinion. One of the key tools to help lower inflation will be raising interest rates which generally attracts investors and helps strengthen the currency in question. I wouldn’t be worried about a slight dip in inflation levels just yet, Sterling is likely to shrug off a 0.1% or 0.2% drop relatively easily.

On Friday this week, the latest retail sales figures are likely to draw more attention. We are largely looking to see what affect the rising prices of goods has had on the amount being sold. Promotions such as Black Friday helped retail sales to surge to 1.1% prior to Christmas, however a large -0.6% drop is expected to affect Sterling’s value this Friday. Keep an eye on these two worthwhile data releases.

EU withdrawal Bill

Economics aside, the EU withdrawal bill is to come back into focus. The amended bill is likely to return to the house of commons tomorrow. Rumors have been circulating already – the government has apparently softened its approach, allegedly giving parliament the right of final approval and also having a flexible leaving date. The bill passing through coming will likely leave Sterling unscathed, however the debate is likely to bring Brexit back into the spotlight after a quiet Christmas period and is likely to bring volatility … Brace yourselves.