It has certainly been an interesting week so far for the Pound as GBP exchange rates can’t decide which way to move! Yesterday saw the Pound spike upward several times which offered short-term opportunities for those looking to sell Pounds – especially against the Euro and US Dollar, against which the Pound has struggled of late.

The positive movement for the Pound during yesterday was most likely due to UK inflation figures which showed a 1% gain in inflation over the past year. While this is currently still below acceptable levels the inflation rate could spiral out of control if the Pound continues its slide, especially if some analysts prediction of GBP/EUR parity come to fruition.

With a number of financial institutions including HSBC predicting that the Pound to Euro exchange rate will reach parity (an additional fall of 9%) we could continue to see consumer prices increase as imports become more expensive. This will drive the inflation rate up further and may result in the Bank of England (BoE) having to act.

I’m expecting today to be a busy day for exchange rates with a number of economic data announcements including the significant European Central Bank (ECB) interest rate decision and monetary policy statement. Some analysts are predicting a move to 0% by the ECB would could result in some substantial Euro exchange rate movement.