The moves we’ve seen over the past couple of days have been somewhat extreme - gas prices, oil prices, some of the commodities and the threats of stagflation, you’re at a relative low, and there’s always a chance to bounce up.

Stuart Cole

Whatever you raise interest rates to in the UK, it is not going to have a material impact on the price of gas or oil, because there is a genuine shortage, so if you’re a producer, it is happy days.

Inflationary pressures do not look to be as transitory as the major central banks have been claiming, with the markets increasingly taking this view and leading to the tightening we have been seeing in the financial markets.

Going forward, the big question is just how long can the Fed maintain its dovish stance in opposition to the markets, particularly if companies begin raising wages to encourage unemployed labor back into the workforce, in turn driving a large hole in the Fed’s transitory inflation argument.

The re-opening of the dominant UK services sector as lockdown restrictions are removed is expected to provide a further boost for sterling.

The UK may not be recovering as fast as the U.S., but it is ahead of the EU. Hence why I think sterling should more easily outperform the euro compared to the dollar going forward.