Foreign Exchange: Pound Rallies Against The Euro

The Pound has made widespread gains against the major currencies this morning, including against the US Dollar and hitting a high of 1.1450 against the Euro.

The strengthening of the Pound camer following the Bank of England’s quarterly inflation report showed that policy makers are concerned about a near-term rise in inflation.

Consumer prices are already double the government’s target, at 4%, and the report this morning indicated that prices are set to accelerate further following the unexpected drop in March.

Despite he UK economic revovery remaining fragile, accelerating inflation will prompt fresh speculation that the MPC may lift interest rates sooner than the latter part of the year. Doing so will help revive support for the Pound but in reality the BoE are unlikely to risk the recovery by raising interest rates too soon.

The current rally for the Pound may be a temporary relief, particularly against the Euro, following renewed concerns over sovereign debt and Greece’s need for further fiscal aid.

To that end, Euro and Dollar buyers can benefit from the short-term reprieve for the Pound and take advantage of the current rate.

It also seems a good time to consider the benefits of a stop order to protect against a decline in the Pound. It is still more likely that the European Central Bank will raise interest rates again before the Bank of England.

If you would like to discuss ‘stop orders’ or get a live rate for a currency transfer, MoneyHighStreet.com are pleased to partner with TorFX, a leading provider of currency exchange services.

Any analysis and/or forecasts are provided to help understand market conditions and developing trends. Readers are wholly responsible for their own trading decisions.