Forex Spread Betting - UK Inflation Up and Sterling Under Pressure

A look at the FX Markets from Michael Hewson, Market Analyst, CMC Markets.

The weaker Pound, along with higher oil prices, has continued to push inflation levels higher with CPI figures coming in at 3.7%, while year on year retail price figures have jumped through 5% for the first time since 1991.

As a result Mervyn King will have to write his first letter to the new Chancellor of the Exchequer explaining why inflation is well above the 2% target.

The upshot of this is that it is highly unlikely that the Bank will be able to indulge in further quantitative easing in order to stimulate the economy.

With the first announcement of spending cuts due next week and the possibility of a VAT hike in the emergency budget next month, there is a concern that the Bank of England is being overly dovish on the inflation front for 2010.

The odds of a rate hike before the year end have certainly increased, and the likelihood is that the Governor will have to write quite a number of these letters to the Chancellor over the coming months.

Despite the stickiness of these inflation numbers the Pound has slipped back against the US Dollar after briefly peaking above $1.4500 this morning. It has also slid back against the Euro but still within its broader range.

The $1.4500 area remains a key obstacle to further Pound gains against the Dollar and a peak over $1.4520/30 today quickly gave way to a pullback below $1.4450.

Cable needs to break above trend line resistance to snap the recent downtrend and provoke a sharper rally towards $1.4780.

While below this resistance area the odds favour a re-test of the lows yesterday at $1.4250, on the way to a test of the key $1.3980/1.4000 monthly support level.

CMC Markets - Live Prices, Charts, Indices, Equities,
Commodities, Forex and more >> read the CMC Markets Review.

Spread betting, CFDs and FX are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.

Article approved by CMC Markets. CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.

Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

'Forex Spread Betting - UK Inflation Up and Sterling Under Pressure', Feature by D. Jones, last update: 18-May-10

Related articles:

CMC Markets, 27-Jan-12,
CMC Markets offers 1200+ Spread Betting markets and a wide range of CFDs. With a CMC Account you can trade 24 hours a day on Forex, Indices, Commodities and...see: CMC Markets

CMC Markets Spreads, 27-Jan-12,
CMC Markets offers both Spread Betting and CFDs. You can trade 24 hours a day on a wide range of markets including Indices, Currencies, Commodities and...see: CMC Markets Spreads

CMC Markets Spread Betting, 27-Jan-12,
The new CMC Markets spread betting platform delivers consistently competitive spreads. These new spreads, improved margins and additional decimal places are exclusively available on the new CMC Markets trading platform. With CMC you can...see: CMC Markets Spread Betting

CMC Markets Offer, 17-Jan-11,
Spread Bet Risk Free for a Week with CMC Markets. Open a CMC Markets account and fund it with £200. You will then be able to...see: CMC Markets Offer

CMC Markets - New iPhone Spread Betting Application, 10-Sep-10,
CMC Markets have launched a financial spread betting iPhone application. The app lets iPhone users access to live prices and spread bet on thousands of markets such as equities, indices, FX and commodities....see: CMC Markets - New iPhone Spread Betting Application

Forex Indicators, 7-Jun-10,
Forex Indicators: EUR/USD has broken its final short term support at $1.2110 and plummeted on Friday. The next support level is from Feb 2006 and is at...see: Forex Indicators

Stock Market Indicators, 26-May-10,
Stock Market Indicators: The SPX 500 has reached yet another support level at 1043, can it hold? The MACD is again showing an acceleration in the...see: Stock Market Indicators

Commodities Indicators, 14-May-10,
Commodities Indicators: Gold reached a fresh all time high on Wednesday, the metal hit $1248.5. It is currently...see: Commodities Indicators

CMC Markets Offers Lowest Ever Spreads, 6-Jul-11,
CMC Markets has cut its spreads to the lowest level ever, which means that it costs less to trade. CMC Markets spreads customers can now trade foreign exchange and the world's major indices from as little as...see: CMC Markets Offers Lowest Ever Spreads

Commodities Set For a Correction?, 7-Jan-11,
The Reuters CRB has always been a good indicator of broad commodity strength so when it starts to exhibit signs on a possible reversal it’s usually time to sit up and take notice. Since the peaks of 2008 the...see: Commodities Set For a Correction?

CMC Markets - Next Generation Spread Betting Charting, 30-Nov-10,
CMC Markets have launched their new charting package which is available to all demo and live users of their next generation spread betting platform. The new, powerful proprietary charting and drawing...see: CMC Markets - Next Generation Spread Betting Charting

Best Spread Betting Service, 30-Nov-10,
CMC Markets have been awarded the title of 'Best spread betting service' by readers of Shares Magazine at the Shares Awards 2010. ''The award is very important to us because it is voted for by...see: Best Spread Betting Service

Pound Spread Betting Market Rises After Less Dovish BoE Report, 10-Nov-10,
This morning's slightly less dovish outlook from the Bank of England has seen the Pound continue to push higher. Yesterday's figures from the National Institute for...see: Pound Spread Betting Market Rises After Less Dovish BoE Report

Gold and Silver Spread Betting Markets May Indicate Breakout, 8-Jul-10,
Gold and Silver Spread Betting Markets May Indicate Breakout: What has been most notable about this particular rally in the gold price has been the failure of both silver and platinum to follow through with...see: Gold and Silver Spread Betting Markets May Indicate Breakout

US Index Spreads Fall to Key Support Levels, 2-Jul-10,
US Index Spreads Fall to Key Support Levels: The last three months have been fairly volatile ones for equity markets in general and certainly the first quarter of 2010 began promisingly. The S+P 500 had, until this quarter, posted 4 successive quarterly gains in a row since...see: US Index Spreads Fall to Key Support Levels

Copper and FTSE Spread Betting Markets Display Bearish Signals, 28-Jun-10,
Copper and FTSE Spread Betting Markets Display Bearish Signals: Over the past 18 months it has been striking how well the copper and equity markets have moved in lock step with each other. Copper has always been closely scrutinised as a bellwether of...see: Copper and FTSE Spread Betting Markets Display Bearish Signals

Positive Reaction to Budget Sees Sterling Spreads Rally, 22-Jun-10,
Positive Reaction to Budget Sees Sterling Spreads Rally: This one-off emergency budget is being held against a backdrop of concern about fiscal and sovereign debt woes globally, but especially in Europe. This presents an opportunity...see: Positive Reaction to Budget Sees Sterling Spreads Rally

Coffee Spread Betting Markets Near 10 Year Highs, 21-Jun-10,
Coffee Spread Betting Markets Near 10 Year Highs: The 20% rise in coffee prices over the past few days has largely been down to concerns about poor crop harvests in Vietnam and Central America. The last time they were at these heady levels was in...see: Coffee Spread Betting Markets Near 10 Year Highs

Indices Spread Betting Markets Near Key Resistance Levels, 16-Jun-10,
Indices Spread Betting Markets Near Key Resistance Levels: Equity markets have continued to trade in a fairly volatile range over the past weeks, gyrating between their lows and significant resistance levels at or around their 200 day moving averages as well as...see: Indices Spread Betting Markets Near Key Resistance Levels

Sterling Spread Betting Markets Look Well Supported, 14-Jun-10,
Sterling Spread Betting Markets Look Well Supported: This morning's statement by the new Office for Budget Responsibility didn't really produce any surprises on either the growth front, or the deficit front. These comments have supported Sterling...see: Sterling Spread Betting Markets Look Well Supported

UK Gilt Spread Betting Markets Trade Below Key Resistance, 9-Jun-10,
UK Gilt Spread Betting Markets Trade Below Key Resistance: This morning's worse than expected trade figures have seen 10 year gilt prices slip back slightly away from their recent 12 month highs around...see: UK Gilt Spread Betting Markets Trade Below Key Resistance

Sterling Spread Betting Markets Gain as Euro Wanes, 4-Jun-10,
Sterling Spread Betting Markets Gain as Euro Wanes: One of the currencies that the Pound has gained against significantly has been the sickly Euro which has lost over 5% of its value in the last month alone. A break of the key 18 month low at ...see: Sterling Spread Betting Markets Gain as Euro Wanes

Spread Betting Markets Looking Bearish, 25-May-10,
Spread Betting Markets Looking Bearish: The recent declines in equity markets over the past couple of weeks have prompted some investor nervousness about the sustainability of the recent rally of the last 14 months. We've certainly seen corrections similar to...see: Spread Betting Markets Looking Bearish

Crude Oil Spread Betting Market at Key Support Levels, 21-May-10,
Crude Oil Spread Betting Market at Key Support Levels: The failure to break above the April highs of $87.10 in May prompted a sell-off below the $80 mark. Fears of a slow down in economic growth, due to...see: Crude Oil Spread Betting Market at Key Support Levels

Euro Spread Betting Market Drops to 4 Year Lows, 19-May-10,
The German authorities caught the market completely on the hop. It has introduced a temporary ban on naked short selling and naked credit-default swaps of euro-area government bonds starting at midnight last night. The affect on the Euro has been...see: Euro Spread Betting Market Drops to 4 Year Lows

Forex Spread Betting - UK Inflation Up and Sterling Under Pressure, 18-May-10,
Forex Spread Betting - UK Inflation Up and Sterling Under Pressure: The weaker Pound, along with higher oil prices has continued to push inflation levels higher ever high with CPI figures coming in at 3.7% while year on year retail price figures have...see: Forex Spread Betting - UK Inflation Up and Sterling Under Pressure

Euro Spread Betting Markets Hit Key Support Levels, 18-May-10,
Euro Spread Betting Markets Hit Key Support Levels: Last week's Euro-Dollar break below the $1.2700 area, if confirmed on a monthly close, could have potentially bearish consequences for the single currency from a...see: Euro Spread Betting Markets Hit Key Support Levels

European Debt Woes Continue to Weigh on the Euro, 23-Apr-10,
European Debt Woes Continue to Weigh on the Euro: This week the International Monetary Fund warned that rising government debt has replaced stresses in the financial industry as the single biggest threat to...see: European Debt Woes Continue to Weigh on the Euro

Euro Dollar and SPX 500 Trading Trends, 23-Apr-10,
Euro Dollar and SPX 500 Trading Trends: The SPX 500 has bounced back from Fridays sell off and is once again testing short term resistance at 1213. The danger here is that this could develop into...see: Euro Dollar and SPX 500 Trading Trends

Sterling Set to Remain Choppy Ahead of UK Election, 22-Apr-10,
Sterling Set to Remain Choppy Ahead of UK Election: The performance of the pound over the next couple of weeks is likely to continue to trade in a broad range and remain choppy as we head into the UK election on...see: Sterling Set to Remain Choppy Ahead of UK Election

Euro Spread Betting and the Bailout, 12-May-10,
Euro Spread Betting and the Bailout: The Euro has continued its slide back from its overnight highs after a slow realisation that the bail-out, while welcome from the point of view of bringing down...see: Euro Spread Betting and the Bailout

Looking to improve your trading results? Get free trading tips and trading analysis as well as the latest trading offers » Trading News.

Risk Warning: Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.

Disclaimer: Online-Spread-Betting.com does not endorse the information and analysis available on this site. It is provided purely for information purposes and is delivered as a personal view of the writer. Under no circumstances is the information hereon to be used or considered as, an offer to sell, or a solicitation of any offer to buy. The website content does not constitute investment advice and neither the individual contributor nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the content.

* Tax Free Trading: Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.

Spread Betting Firms

Capital Spreads

City Index

CMC Markets

ETXCapital

Financial Spreads

GFT

IG Index

Spreadex

Spread Betting Offers

Spread Betting News