No recovery for falling Pound

Yesterday saw the woes for the pound continue amidst a day of only a handful of data releases. In the morning Euro data dominated, with German import and export data coming in better than expected. The string Euro was then bolstered by a Sentix investor confidence report for the Eurozone showing a bullish outlook up to 8.5 from a predicted 6.3 and previous reading of 5.6.

With no data releases from the UK, this did not help GBP – still reeling from last week when we saw it crash overnight following comments from French PM Hollande, which then saw algorithmic trading push the pound down at one point by 6% in 2 minutes. Against the USD it was a similar story and although the US didn’t release any data, a lack of any UK releases to go off coupled with the overriding negative sentiment towards GBP and as we look towards a US interest rate hike combined with a probable UK cut saw the pound struggle to regain any ground against the Greenback.

Today is a much busier day in the way of data with the German and Eurozone ZEW economic survey releases in the morning, whilst in the afternoon focus shifts to the US who release their Redbook and also Labour Market conditions index reports. With no data releases from the UK again there is a strong chance we will only see GBPs losses continue. Perhaps more concerning though is the long term view for the Pound. Against the Euro we are looking at a likely 5 months of uncertainty following Brexit, and against the US Dollar which is strengthening as we await a likely interest rate hike. This is set against the likelihood that the Bank of England will cut interest rates again this year. So whilst the crash we saw last week was unexpected sadly the outlook doesn’t lend to assuming we will see any recovery in the short-term, with many of the banks predicting parity for the pound by the end of the year.

Should you have any upcoming requirements do speak to your broker today before it gets any worse. Remember Currency Index offers forward contracts which allow you to fix your exchange rate up to a year in advance with only a 10% deposit – a great way to protect your purchase in what is a very concerning market.