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Pound jumps on inflation figures
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Published on 16.08.2016 23:32

The pound has rebounded strongly sharply on the back of strong inflation figures which many investors attribute to the sharp fall in the local currency after Brexit.

At 9.15pm (GMT) the British pound was trading at US$1.3040 up from US$1.2960 in yesterday’s trading.

Consumer price figures rose 0.6 percent last month against analysts’ expectations for a 0.5 percent rise marking their highest level in nearly 2 years.

Although the numbers are good for some, the sudden spike showed a large increase in import prices as imported goods became cheaper due to the weaker currency,

“This is going to be a concern over the upcoming months, because it indicates that the significantly weaker currency is already feeding into higher import prices,” noted Jameel Ahmad, vice president of market research at FXTM

The threat is that this will consequently be seen in headline inflation readings over the coming months.” he added.

The sudden bounce may be short lived however after an interview with New York Fed President William Dudley who noted that better conditions such as an improved labour market which may give the US Federal Reserve the option to raise interest rates next month, 

"We're edging closer towards the point in time where it will be appropriate I think to raise interest rates further." He said

"It's possible to hike interest rates at the mid-September meeting”.  he added.


Andrew Masters

Analyst

The power of leverage is the power of Forex.
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