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Daily strategy - Inflation won't support Sterling
There will be intense speculation that the Bank of England will raise interest rates over the next few months in order to control inflation and a hike in February looks increasingly likely. This may provide initial Sterling support, but the net risks to the currency are actually rising. There will be doubts whether the bank will be able to act firmly enough and there will also be fears that policy tightening will push the economy back into recession given the extreme debt profile and banking-sector vulnerability. The overall policy mix and fundamentals remain unattractive and Sterling is set to weaken again. GBP/USD ... (full story)