Sterling Digest, April 18 2012: when fundies turn hawkish

£20,bank of England
Is sterling strength here to stay?

Sterling comes alive this week after core UK CPI ticked higher-than-expected yesterday and a known BoE dove turns hawkish today. While economic data is important and moves the currency, the 2 most important fundamental pieces to watch concerning sterling are inflation and the Bank of England’s reaction to it. This week, both turned hawkish. If this becomes a trend, we could see sterling strength remain with a $GBPUSD that is above 1.60 and a $EURGBP at 0.80.

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