British Pound Advances Versus Dollar and Euro on Inflation Outlook
Posted by Edward Dy on June 16th, 2008
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Photo Credit: paperfairys
The pound escalated for a second day versus the US dollar and euro on bets that UK inflation is greater than the Bank of England’s May target.
The British pound also increased on forecast 3.2 percent consumer-price growth the previous month.
The British pound is on the rise as can be seen in CPI values. The currency surged up to 1.1 percent to $1.9688. During the previous month however, Inflation advanced to 3.2 percent, the fastest pace ever since 1997.
Interest-rate futures reveal that traders are increasing their bets that the Bank of England will be lifting borrowing costs as inflation worsens. There was a 6.41 percent implied yield on the short-sterling futures contract due December. However, the value was 5.84 percent a couple of weeks ago.
The pressure coming from the global credit crunch and escalating food and energy prices have proven to be the biggest challenge faced by the central bank.
There is a technical indication that the UK pound will reach $1.98 this week, according to analysts.
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