Sterling continues strength ahead of key inflation data - GBP gains on EUR USD AUD NZD CAD CHF SEK and most major currencies

Sterling continued the reasonable start to the week this mornnig making further gains against a basket of major currencies most notably the Australian Dollar and South African Rand - both with gains of over 1% at the time of writing this post.

Inflation data is due out at 09:30am and could be a big market mover dependant on how the figures come out.

Should inflation come out as being particuarly high this would usually lead to Sterling strength (The way to usually tackle high inflation is to hike interest rates and a hike in interest rates would usually be seen as positive for the currency concerned) however in this instance we are not really in the position to hike interest rates due to the economic conditions over here, so this may well be viewed as negative for the Pound as the Bank of England pretty much have no control over inflation.

The BOE also release their inflation report which may give indications as to just how they will go about tackling things in the short term so expect volatility following this as markets do move on rumour as well as fact.

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