Pound rising against backdrop of Brexit talks and rising inflation | City & Business | FinanceHeat Profit
Sterling is now 1.1341 against the euro and 1.3325 against the dollar.
A rising inflation rate can trigger a negative effect on a country’s exchange rate – but this does not seemed to have affected sterling.
On December 14 EU leaders are scheduled to meet in Brussels which could also adversely affect the value of the pound as Brexit talks and the pound are now linked in the eyes of the Markets.
Laura Parsons, currency analyst at TorFX, commented on the exchange rate and the pound’s “modest gain” and its significance amid Eurozone figures.
“While the pound struggled to hold its own against most the majors on Tuesday, it did at least record a modest gain of 0.3% against the euro.
“Sterling failed to derive much benefit from the news that inflation had unexpectedly risen to 3.1% in November.
“The confidence measure for Germany dropped from 18.7 to 17.4, while the index for the Eurozone as a whole slipped to 29.0 from 30.9.”
The health of Germany can lead to consequences for the euro.
The pound’s rise against the dollar is also being linked to Brexit talks. Still the second round of Brexit talks are being seen as more difficult and will most likely provide more uncertainty in the Markets.
Craig Erlam, senior Market analyst at OANDA, told Sky News: “We’ve seen a rally in the pound over the last couple of weeks on the expectation of a deal being agreed so what we may be seeing is simply a case of buying the rumour and selling the fact.”
Today’s announcement that Democrat Doug Jones has won his seat in Alabama’s Senate has also saw the dollar drop even further.