It could force central banks to tighten policy to a greater extent than anticipated

Sterling has not been a popular currency in recent years as a result of concerns over Brexit, but it did stage a good recovery in 2021 as these worries subsided

Central banks are becoming worried that inflation is proving stronger and more persistent than had been expected

The outcome of the policy meetings held by three of the world’s main central banks last week was a distinct move towards tighter monetary conditions to a greater degree than had been expected.

The European Central Bank can be expected to reaffirm its view that interest rate rises are very unlikely next year

The recovery in labour markets has been particularly impressive. Corporate and household balance sheets are in a very robust state

The labour force has increased by 170,000 or almost 7% in the past two years, with the participation rate standing at 65%, up sharply from 62.5% in 2019

Expectations in regard to interest rates are having a perceptible impact on currency markets.

UK exports in the third quarter were almost 15% below their levels of three years earlier while Eurozone exports have risen back above their levels 

The view of central banks remains that the spike in inflation will not be sustained and annual rates should start to fall back towards target from around the middle of next year