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25 Eastcheap 2nd Floor
London EC3M 1DE
United Kingdom

+44 (0) 20 3880 0575

help@privalgo.co.uk

Office Hours
Monday - Friday
8:00am - 5:30pm

On Friday, we talked about how GBP left other major currencies in the dust thanks to a surprise shift in sentiment from the Bank of England. Now, with optimistic data coming from the latest ONS jobs report and newly released CPI figures for August, the pound has the capacity to continue on this trajectory.

This week, our Currency Experts discuss inflation data on both sides of the Atlantic, job vacancies in the UK and the looming threat of Covid.

If you’re reading this and feel that your business could be affected, please get request a quote via the link below. One of our Currency Specialists will be in touch with you as soon as possible to give you a quote, discuss your requirements and talk you through our solutions.

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Brendan Leonard
Business Development Manager

Up until now, it could have been argued that the gains made by GBP were hinged on other major currencies faltering. The problem is — progress like this only lasts so long. 

But now, with UK CPI released this morning, the pound could have something solid behind it. 

According to the data, UK year-on-year inflation increased from 2% to 3.2% in August, exceeding expectations of 2.9%. Meanwhile, core CPI beat expectations, reaching 3.1%. 

The news has helped boost GBP/USD beyond 1.383 and push GBP/EUR back up above 1.17. 

Will rising consumer prices mean lasting positivity for the value of sterling? Possibly. The Bank of England is currently split as to whether the conditions are met to raise interest rates. Today’s CPI numbers might what’s needed to push them over the line. 

Then again, Brexit issues still won’t go away, and UK Covid numbers are starting to become seriously worrying — all factors that could harm GBP’s progress. 

Patrick Oakley
Business Development Manager

Turns out US inflation could have been transitory. From the CPI data released yesterday, it looks like price rises are starting to cool. While headline inflation still weighs in at 5.3% YoY for August, core inflation is at 4%, down from the forecasted 4.2%. 

A big part of what drove prices up in the first place — and is now responsible for their downfall — is second-hand cars, the costs of which rocketed due to global chip shortages and Americans emerging from lockdowns with healthy bank accounts. But everything that goes up must come down. 

Yesterday’s data release will exacerbate things for dollar bulls, who are already reeling from August’s poor employment data and a continuously dovish message from the Fed. 

With verification that inflation is more than likely transitory, there’s a higher chance that Jerome Powell will delay tapering further — perhaps even to 2022. 

The FOMC speaks next week, potentially with this news. We could see USD tumble further. 

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John Hallahan
Business Development Manager

GBP is rallying due to spicy CPI data released yesterday. But with 338 people admitted to hospital with Covid in the last seven days, things are uncertain as to how far sterling will progress. 

As you know, the government has announced two potential ways forward: Plan A and Plan B. The former focuses on booster jabs for the over 50s while the latter means Covid restrictions (vaccine passports for nightclubs, mandatory facemasks and more). 

Crucially, a winter lockdown is still on the table. If this goes ahead (please God, let’s hope it doesn’t), then it could undo a decent amount of the economic rebound of the last four or so months. In short, this will be catastrophic news for the values of GBP. 

As such, GBP is at somewhat of an inflexion point. On one side, you have an economy on a roll. On the other hand, you have looming cases of the Delta variant. 

Jack Nielsen
Business Development Manager

Throughout the UK’s economic rebound over the last few months, GBP bulls will have had the irking reminder that the end of the furlough scheme was on the horizon. 

Some comfort came yesterday in the form of the ONS jobs report. According to the data, there are now over 1m vacancies in the three months to August, the highest it’s been since 2001 when records began. 

At the same time, figures from July fell to 4.6% from 4.7% and the employment rate rose to 75.2 per cent. 

This news puts the UK in good stead to end furlough. While some people may not emerge from the scheme with their original job, the report shows that there are still plenty of opportunities out there. 

The deciding factor will now be whether the government is prepared to invest and provide the training and education people need to qualify for these available positions. Doing so could provide further support for the value of sterling.

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