The medium term fate for Sterling lies in the hands of the Bank of England and its plans to lower the level of inflation, which is currently running at 7%, up from 6.1% a month ago.

The Bank faces a tricky balancing act as it endeavours to tighten monetary policy to drive inflation lower, but remains aware that the economy remains fragile and could easily be tipped into recession if the tightening is too aggressive.

With energy prices having risen as the price cap was raised at the beginning of the month. Gas and electricity prices to domestic users have been the most significant contributor to inflation over the past month.

Yesterday, the six principal energy suppliers called upon the Government to provide some relief to consumers. They called for the energy cap to be abolished in favour of a simpler and fairer system in order to avoid a horrific situation next winter when it is expected that the cap will be raised again.

The Parliamentary Business, Energy and Industrial Committee was told that scrapping the current cap in favour of a more social arrangement would help the lower paid while the better off would pay more.

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