Despite All Odds – 17th January 2012, Vantage FX UK Update - By: Vantage FX UK

Vantage FX (http://www.vantagefx.co.uk/) provides an overview of the activity currently shaping currency movements. Here Jay Mawji takes a look at news around the Eurozone on 17th January 2012 – including activity around China potentially bringing the new tradable Yuan to the UK.

“It is hard to believe, but headline inflation across Europe and the UK came in lower for the last period of last year. This now changes the way that the European Central Bank will approach interest rates whilst the Bank of England will sit back and observe developments.

Eurozone inflation began to ease from a peak in November, bringing down the headline inflationary rate to 2.7%. This figure will be most welcomed by the ECB who are now likely to further cut interest rates which will help to maintain downward pressure on the cost of borrowing. As the cost of borrowing presses higher in the Eurozone, countries struggling with their debt will find it more and more difficult to make default deadlines. Analysts have begun predicting that European interest rates will be cut to 0.5%, which will also encourage private investors to move capital investments toward the bond markets. Of course, with lower interest rates, the Euro will become less desirable and will add to the list of reasons why investors would be ‘Euro-adverse.’ As always, the ECB will avoid stirring up any more speculation and have no intention of making any comment or pre-committing to any decisions.

Inflation was the headline act in the UK today as well, with December inflation falling to 4.2%. Sir Mervyn King appears to be a magician once again as he predicted that UK inflation would begin falling in late 2011 and continue to fall to as low as 2% by the end of 2012. Such news will do wonders to improve confidence in the UK as spiralling inflation has been squeezing all pockets around the country. The recent fall in inflation was the largest since April 2009 and has been attributed to falling energy prices as well as retailers offering strong bargains and sales ahead of the Christmas Period. The Bank of England seems set to continue their ‘hands off approach’ and intend to leave interest rates unchanged for as long as it takes for Quantitative Easing to take full effect in the UK, even if this takes until 2016.

It may seem that inflation is finally under control… but then again, there is a potential war looming in Iran!”

Learn more about Forex trading and Vantage FX at http://www.vantagefx.co.uk/

Trading derivatives and Forex carries a high level of risk to your capital and you should only trade with money you can afford to lose. Forex trading may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary.

About Vantage FX UK

Vantage FX UK is a Forex trading broker based in the City of London, providing foreign exchange trading services to clients in the UK, the EU and the rest of the world.

What sets Vantage FX apart is its wide range of services and outstanding level of customer support. The company strives to provide an intuitive, interactive Forex experience by continually innovating and taking advantage of the latest trading technology, such as MetaTrader 4 and Expert Advisors.

Vantage FX also offers extensive educational resources to help give traders their edge, keep up with daily market commentary and try a Forex trading practice account.

About the Author

For further information, visit http://www.vantagefx.co.uk/

Article Directory Source: http://www.articlerich.com/profile/Vantage-FX-UK/213518

Additional Articles From - Home | Investing | Forex trading