Inflation decline saw more people sell sterling

The recent decline in inflation levels has seen more people with private wealth start to sell sterling.

Earlier this week, the Office for National Statistics reported that the consumer price index annual inflation fell from 4.4 per cent in February 2011 to four per cent the following month.

Interactive Investor revealed that as a result of this, people have begun to exchange the currency.

"Our forex traders jumped on the back of the fall from 4.4 per cent to four per cent and continue to sell sterling against the euro," Mike McCudden, head of derivatives at the firm, noted.

He added that in the minutes following the news from the government, "the market fell sharply".

Mr McCudden said this is likely to be because the announcement came as a "welcome surprise", predicting that the rise in the Bank of England base rate may be put off for a while after it was maintained at 0.5 per cent last month.

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