Pound Appreciates As BOE Broadbent Sees Inflation Exceeding 5% Next Spring
December 06 2021 - 4:13AM
RTTF2
The pound climbed against its major opponents in the European
session on Monday, following comments from Bank of England Deputy
Governor Ben Broadbent that a tightening of the labor market could
lift inflation, which is likely to comfortably exceed 5 percent in
April next year.
"The aggregate rate of inflation is likely to rise further over
the next few months and the chances are that it will comfortably
exceed 5% when the Ofgem (regulator) cap on retail energy prices is
next adjusted in April," Broadbent said in a speech to Leeds
University Business School.
A tight labor market could fuel inflationary pressures, if wages
continue to rise due to the competition for workers.
Broadbent, however, said that he had not made a decision
regarding his vote on interest rate next week amid Omicron-related
uncertainty.
Survey results from IHS Markit showed that UK construction
activity logged a sharp expansion in November, led by the fastest
upturn in commercial work since July amid reopening of the
economy.
The Chartered Institute of Procurement & Supply services
Purchasing Managers' Index rose to 55.5 in November from 54.6 in
October.
The pound firmed to 0.8500 against the euro, 1.3286 against the
dollar and 150.38 against the yen, up from early lows of 0.8547,
1.3210 and 149.04, respectively. The pound is seen facing
resistance around 0.84 against the euro, 1.34 against the dollar
and 152.00 against the yen.
The pound touched a 4-day high of 1.2252 against the franc,
after declining to 1.2103 at 5 pm ET, its lowest level since
January 25. Next key resistance for the pound is seen around the
1.24 area.
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