Foreign Exchange Daily Market Update 14/02/2018

Wed, February 14, 2018

Sterling strengthens as U.K. Inflation Boosts BOE Rate Hike Case.

Sterling rose against the dollar for a second day after data showed better-than-expected inflation, boosting the case for the BOE to increase interest rates again this year.

The pound halted a two-day decline against the euro as annual consumer-price growth held steady at 3% in January, it was predicted to slow down to 2.9%. Mark Carney the Bank of England Governor said last week that the central bank may need to tighten policy sooner and faster than anticipated, prompting a repricing of market interest-rate expectations.

Better -than-expected inflation enhances the view that the BOE may hike rates in May, given the central bank’s concerns about inflation

Officials at the central Bank have backed the view that more rate hikes are coming, saying that borrowing costs will likely rise earlier than previously thought. The U.K. will need a succession of rate increases to stop the economy from overheating. There is a 75% chance of a rate hike in May this year.

Sterling rose as much as 0.5% to $1.3902 against the dollar, while it climbed 0.1% to 1.127 against the Euro.

• Consumer-price growth unexpectedly holds at 3% in January
• Data supports the case for a BOE rate hike in May: Danske

Data to look out today.   

13:30 USD Consumer Price Index (YOY ) (JAN)

13:30 USD Retail Sales (MOM) (JAN)

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PRESS RELEASE

KBRFX was mentioned in the Essex Chronicle for the top 100 companies by turnover in Essex http://www.essexchronicle.co.uk/100-Essex-businesses-revealed-annual-survey/story-25140555-detail/story.html

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