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Pound down on weak inflation
Published on 23.03.2016 23:42

The British pound is sharply lower today on weak inflation data and the possibility that the US Federal reserve could raise rates as early as next month.

At 8.34pmc (GMT) the pound was trading at US$141.17 down 0.63 percent from yesterday’s trading.

The latest inflation figures from the UK came in at 0.3 percent, unchanged from the previous month and below the 0.4 percent expected by analysts.

Inflation is one of the key indicators for the Bank of England in their quest to lift interest rates but with such figures nobody is expecting any action soon, which caused the pound to weaken.

Also hitting the local currency is expectations that the US Fed may lift rates next month completely contradicting last week’s statement.

US Fed president Janet Yellen talked down the expectations of a rate rise last week with analysts left wondering when the Fed would once again raise rates, if at all this year.

In a sign that many board members taking an opposite stance St. Louis Fed President James Bullard joined three other board members for the US central bank to once again raise rates which could come as early as next month.

"We didn't do it, so now we can look at April and see what the data look like when we get to April," Bullard told Bloomberg News.

Philadelphia Fed President Patrick Harker is also on board and said the Fed should move on rates as early as next month.

The number of Fed board members now pushing for a rate hike is 4 out of 5 with Janet Yellen beginning to look like a fish out of water. 

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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