Sterling has found life tough going of late, with investor confidence in the Pound evaporating over recent weeks. The table below shows the change for a number of currency pairings over the last month:
|Currency Pair||% Change||Difference on £200,000|
It has been well publicised that the Bank of England’s (BoE) decision not to raise interest rates, caused a rapid sell-off of Sterling currency positons. This in turn caused the Pound’s value to drop sharply against the major currencies, with heavy losses against the EUR, USD & AUD amongst others.
BoE governor Mark Carney’s tried to remain optimistic about the UK economy and the potential for future rate hikes but after yet another false dawn, is he fast becoming Mr Unreliable?
This is certainly the view taken by the Guardian, with an article yesterday scathing in its attack on Carney and his unfulfilled claims.
This may be viewed as being a little harsh, especially when you consider that the UK economy is facing an uphill struggle to negotiate its way into a new era, ultimately with its hands firmly tied behind its back.
However, it is hardly likely to boost investor’s morale and the Pound could find further resistance, especially if this view point is echoed by others.
Carney is becoming all too predictable in his defence and a new line may have to be taken if he is to win back the doubters.
Either way it seems as though investors are at the very least taking his seemingly bullish stance on the UK economy with a pinch of salt, with the pound struggling to make any impact across the board since Thursday’s monetary policy statement.
GBP/EUR rates remain marooned just above 1.13, whist Cable rates continue to find resistance around 1.36. Sterling has found some support against the AUD around 1.80 but this is a near five cent drop from the highs of last month.
Overall there can be no argument that Sterling is in the midst of a torrid run and with Brexit once again taking centre stage, we could find the Pound under increasing pressure over the coming days.
Any clients with Sterling currency positions to execute, who are looking for any potential market triggers should be keeping a close eye on today’s economic data releases.
The UK’s official Unemployment Rate is released at 09.30 alongside average earnings. Last month’s figures came out above expectation and the Pound could certainly benefit from a similar improvement this month.
We also have the latest Inflation Report hearings and again any fall towards the government’s target of 2% could help curb any further losses for the Pound during today’s trading.
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