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Why we can expect further sterling strength

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June 18, 2014 britain, british, british economy, british jobs data, british museum, british pound, british unemployment, eur, euro, eurozone, foreign exchange, forex, forex idea, forex market, forex markets, forex saxo bank, forex trading, fx, fx forex, fx market, fx markets, fx options, fx strategy, fx trade, fx trading, fx volatility, gbp, gbpeur, gbpusd, inflation, inflation rate, inflation rates, inflation report, inflation target, lea jakobiak, macro, macro economics, macro economy, macro event, macro events, macro policy, macro strategy, macro-economics, macroeconomic, macroeconomics, neil staines, saxo bank, saxo tv, sterling, sterling appreciation, sterling dollar, sterling forex, sterling strong, sterling trading, tradingfloor.com, video

As UK inflation eases to a four-and-a-half year low of 1.5 percent in May, London-based trader Neil Staines explains he continues to be positive when it comes to sterling. He says the movement in yield differential has become significant, which is lending itself to further strength.

That said, Neil adds that what’s key is how investors view sterling on the foreign exchange markets. He says: “If you're dollar-centric then it’s a slightly more of a difficult issue because the US is broadly in line with where we are in the UK. The winter weakness over there led to a very weak Q1". However, against the Eurozone - where monetary policy seems to be moving in the opposite direction – sterling paints a different picture, according to Neil.
This means that overall, it is “more complicated” to look at sterling directly against the dollar at the moment, but on a broad sense Neil continues to be very positive on Sterling going forward.
Inflation has now been at or below the Bank of England's 2 percent target for six months.