The British pound is believed to weaken opposite the Euro today as inflation in the UK is
\nestimated to have remained at a relatively high level in December, suggesting
\nthat the squeeze on household incomes continue to be painfully tough. Meanwhile,
\nsigns of stabilization continue to buoy the Euro after ratings agency Standard
\n& Poor\u2019s raised its outlook on both Luxembourg and Finland earlier.<\/p>\n
The UK Office for National Statistics is awaited to report that steep rises in energy
\nbills kept inflation high in December. Economists project that the Consumer Price
\nIndex remained at 2.7 percent for the third month in a row, after a series of
\nenergy companies pushed up prices at the end of the year. Five large energy
\ncompanies introduced price rises in December, hitting some 25 Million
\nhouseholds. Price pressures are said to have been partially offset by lower
\nfuel and food costs, but analysts say that inflation is likely to rise in the
\ncoming months as poor harvests around the world due to extreme weather are apt
\nto lift food prices anew.<\/p>\n
\n
Rising inflation threatens to deflate the government\u2019s recovery hopes by eroding
\nconsumers\u2019 disposable incomes. Recent data from the ONS revealed that average
\nearnings rose by just 1.3 percent in October, failing to keep up with elevated
\nprice pressures. The government is gambling on an improvement in spending to
\nlift the economy this year. It estimates that household consumption should
\naccount for 0.5 percent of the forecast 1.2 percent growth, but recent updates
\nfrom retailers suggest that spending was fairly underwhelming in the Christmas
\nperiod, solidifying views that the economy shrunk again in the fourth quarter.
\nIn fact, NIESR has already forecast that GDP contracted by 0.3 percent in the
\nDecember quarter. In related matters, BOE Governor Mervyn King is due to
\ntestify before the Parliament\u2019s Treasury Select Committee in London today.
\nShould he express a downbeat tone on the economy, the Pound is apt to decline
\non views that the central bank is still considering expanding monetary stimulus
\nin the coming months.<\/p>\n
\n
Meanwhile, the S&P upgraded its outlook on the top-grade credit rating of Luxembourg
\nand Finland from negative to stable, suggesting that the threat of a downgrade
\nhas eased. The agency cited strong financial and political frameworks in both
\nnations as reasons to retain their prized credit ratings. On optimism that the
\nEuro Zone has made considerable progress in its crisis-fighting measures, the
\nsingle currency is apt to rise today, warranting a long position for the
\nEUR\/GBP.<\/p>\n
\n
For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions<\/a><\/p>\n \n","protected":false},"excerpt":{"rendered":" The British pound is believed to weaken opposite the Euro today as inflation in the UK is estimated to have remained at a relatively high level in December, suggesting that the squeeze on household incomes continue to be painfully tough. Meanwhile, signs of stabilization continue to buoy the Euro after ratings agency Standard & Poor\u2019s … <\/p>\n