In January UK inflation came in at an unexpected high of 3.7% and this week more alarming at 4% which is way off the Bank of England’s 2% target. This prompted the formality of a letter of explanation from Mervin King, governor of BoE, to George Osborne, chancellor of the exchequer. The news of higher inflation in January caused much excitement in the markets and the prospect of higher interest rates sent sterling rallying for the rest of the month; up over 300 points against the dollar hitting a …

The Pound has dipped lower against the Euro and the U.S Dollar this morning, while the UK currency also slipped against the majority of the 16 most actively traded currencies, after the Bank of England’s quarterly inflation report. Policy makers expressed a degree of uncertainty that UK inflation would return to the government’s 2% target over the next two years, citing higher commodity prices and a significant increase in consumer prices.

In a week that has prominent event risk for nearly every one of the majors, the sterling is arguably looking at the most ominous wave of releases. This past week, the Bank of England announced its decision to keep the benchmark lending rate unchanged and the bond purchasing program at 200 billion pounds as expected without a disarming statement to give insight into the reasons behind their assessment. This would be a non-event were it not for rampant speculation by market participants that the central bank will be forced to …

It is a amazing that despite some improving signs on the domestic economy, it is developments in Egypt that have helped prop up the dollar in early Friday (February 11) currency trade.

CHINESE CENTRAL BANK RAISES INTEREST RATES TO 6.06%
The British Pound fell back from a high of 1.6161against the USD and tested lower end support against the Euro yesterday as Chancellor of the Exchequer George Osborne announced plans to temporarily raise taxes for local banks. Mr. Osborne said U.K. banks will be charged 0.1% on short-term liabilities and another 0.05% for longer-term liabilities for the next two-months, which is expected to generate an additional GBP 800M in tax revenues. As the private sector activity remains subdued, the extra burden on the …

The euro has retraced back from its three months high of $1.3861 seen versus the dollar yesterday with sentiment undermined by events in Egypt as well as fresh reminders about Europe’s debt problems. Activity though was described as subdued overnight but should turn volatile as we approach the all importan
Traders are also turning cautious on the single currency ahead of today’s ECB press conference. The euro has been pushed higher over recent days on speculation that the central bank may raise rates in response to higher inflation in the eurozone …

The euro has been strong the last two weeks as currency traders were once again convinced that the European Union members have the capacity to support those nations struggling with overwhelming debt.
Now, the euro appears primed for even more gains as Germany faces high inflation and the president of the European Central Bank, Jean-Claude Trichet recently made comments indicating a likely rate increase for the EU.
One euro currently (January 28) nets $1.3714 after surging as high as $1.3748 in overnight European trade.
The US Government announced a short while ago that …