Forex Trading Strategy: U.K. Pound

September 16, 2008 by Trader Rich

Inflation and the sterling in currency tradingOne of the items keeping the Bank of England in check with regard to interest rate is inflation. There is a great deal of fear about inflation, and this has been preventing the BoE from cutting interest rates.

Now, though, there is some thought that inflation will soon drop off, opening the way for interest rate cuts. Bloomberg reports on inflation in the U.K.:

“Inflation is going to spike and then come down and that is going to allow the Bank of England to cut interest rates soon,” said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp. “We are going to see sterling cede further ground.”

This is, of course, expected to have an effect on the sterling in currency trading, and should be incorporated in forex trading strategy for the U.K. pound.