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Pound Sterling Euro Exchange Rate Forecast to Gain Despite Negative UK Inflation Data

November 17, 2015 - Written by John Cameron

Negative UK Inflation Fails to Weigh on Pound Sterling Exchange Rate Today



Today’s headline data release, at least as far as Sterling-watchers were concerned, revealed that the UK economy continued to experience falling prices last month.

The October Consumer Price Index figure printed exactly as per analysts’ expectations at a year-on-year -0.1% signifying that the price of a basket of goods and services was lower last month than it had been in October 2014.

The Office of National Statistics (ONS), which compiles and releases the data, was clear on the driver behind the drop-off in prices, with its report which accompanies the publication pointing to a fall of some 14% in fuel prices during the preceding twelve months.

A related fall in the price of food and drink of 2.7%, largely triggered by the drop in the input cost of transportation caused by cheaper fuel, also contributed to the negative figure.

Rising British Wages and Falling Prices to Support Consumer Spending



Andrew Sentence’s opinion is always sought after key UK data releases.

The former Bank of England monetary policy committeeman, who is now Senior Economic Adviser at PwC, observed earlier that, ‘consumers continue to benefit from the combination of stronger wage increases and very slightly falling prices. The resulting increase in real wages and household disposable incomes should continue to be supportive of consumer spending and economic growth over the year ahead.’

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GBP to EUR Conversion Rate Close to 1.43 Today



Currency market participants appeared to head his words and the Pound Sterling (currency : GBP) registered pronounced gains against the other major global tenders in spite of the negative inflation number.

The Pound euro exchange rate climbed to close to the 1.4300 threshold – the highest it has reached since the first week of August.

Analysts forecast that there could be further gains to come for the pair in the near-term if investors take the same view of sentence and concentrate on the positive effect of today’s British price rise data on household disposable income.
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