Smart Daily Currency Note | Inflation data released today, how will it affect sterling?

Sterling

In a day that was quiet on data from the UK, sterling climbed gently against most of its major pairs reaching a two month high of 1.62 against the US dollar. Against the euro it stayed very close to 1.23 for most of the day. Today, however, is likely to see a great deal more volatility. Significant inflation data is released this morning; last month saw targets overshot by almost half a percent, and sterling reacted favourably, bucking an otherwise downward trend. With instability reigning elsewhere, positive sentiment may paint sterling as a safe haven. Traders will also be looking forward with anticipation to tomorrow's release of the minutes from this month's monetary policy meeting as some expect that the panel may, for the first time in well over a year, have been split on the best monetary policy. Get in touch now for the most up to date pricing.

Euro

The euro had a mixed day yesterday reaching a seven month high of 1.3185 against the US dollar as the President of the European Central Bank remained positive about the future of the Eurozone and a member of the ECB said he does not see the need to cut interest rates. Rumours also circulated that Greece had received the €4.3 billion tranche of its bailout fund booting confidence for the region.  With very little data out of Europe today the markets will look elsewhere for influence. Call in now for the latest news and rates.

US dollar

The US dollar struggled yesterday as traders remain cautious about the looming fiscal-cliff situation. Rumours started to circulate that the Republicans and Democrats were approaching some form of an agreement; but, alas no deal has been made to-date. Manufacturing data from New York came in much worse than expected showing a sharp drop in activity in December. Today we will see the release of Current Account data which is directly linked to currency demand and the forecasted conditions on future Housing Market Index that is currently expected to bring a negative outlook. Call in to see how this will affect the dollar and get a live price from our traders.

Worldwide

Elsewhere, the biggest mover yesterday was once more the Japanese yen, losing significant ground against all major peers on the news that new Prime Minister Shinzo Abe is likely to dramatically expand the country's monetary stimulus. Speculation that Abe will undertake unlimited easing to revive economic growth saw the currency fall to the lowest level since April 2011 versus the US dollar, and at one point dropping below 136 versus sterling. The Hungarian forint also struggled, losing ground across the board on speculation that the central bank may change its policy on holding two-week deposits. Overnight saw the release of New Zealand business confidence, along with Australian monetary policy meeting minutes. Call in now to see how this has affected the currencies and to get a live rate.