Pound Sterling has had a bit of a reprieve this morning with December Inflation figures coming in surprisingly lower than initial forecasts had predicted.
Inflation was expected to hit 2.6% but came in slightly under at 2.5%. Usually, a lower Inflation reading is seen as negative for The Pound because it would lead to an interest rate cut which is less attractive for investors, however with the current economic outlook in The UK not looking good, along with rising bond yields, a drop in inflation gives the UK economy some breathing space. This should now lead to an Interest Rate cut next month by the Bank of England with market probability now at 83%, having been down at 62% prior to this release.
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