The pound lost ground to other major currencies
The pound lost ground to other major currencies on Wednesday morning, following the release of UK inflation data. Consumer prices rose by 11.1% during the month of October, compared with the same period of the previous year – the steepest increase in more than 40 years. These numbers will exacerbate concerns over the growth prospects of the British economy, with a perfect storm of rising prices, higher interest rates and fiscal austerity looming on the horizon. Such a scenario will no doubt impact the sentiment of investors, reducing the appeal of pound denominated assets. With further bad news likely to arrive on Thursday, when the Chancellor of the Exchequer is expected to announce a number of fiscally restrictive measures, there may be scope for more sterling weakness.
Ricardo Evangelista – Senior Analyst, ActivTrades
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