Slow Growth halts Sterling rally

The pound has enjoyed a fantastic couple of weeks against the majors following a string of optimistic polls indicating that the vote to stay in the EU next month has developed a bigger lead over the vote to leave. This news triggered a run of speculative buying for the pound that has seen fortnightly gains of 5.5 cents against the Euro, 4 cents against the US Dollar and another 9 cents against the struggling Australian Dollar. As ever with the currency markets, what goes up must come down, particularly when the driving factors are hypothetical and yet to be fully determined.

All the markets needed was a catalysts, and yesterday morning the latest growth figures for the UK were announced with expectation of a steady growth figure holding at 2.1% on the year. Unfortunately results missed the mark with growth coming it just 2%, underlining continued concerns of slowing economic growth. This data caused the pound to be sold off throughout the day and considering the recent gains could very well trigger the next negative move. Sterling exchange rates will continue to be susceptible to volatility based on any further changes or swings in the polls, and with the decision less than a month away we cannot rule out another phase of uncertainty hitting the exchange rates. Current levels are still the best in a number of months so contact you broker today to discuss options of fixing in these rates for the summer.

As we wrap up the week ahead of a bank holiday weekend, there is now no more UK data left for the month so the focus today is back onto the US. This afternoon at 1:30pm we will see the results of their latest revised Q1 growth figures, with improvements in the annual growth expected up to 0.9% from 0.5% previously. The dollar is likely to be a big mover over the next few weeks depending on their data releases as the markets begin to speculate on the possibility of a rate hike in June as recently indicated by the Federal Reserve. Good figures could easily see the Dollar begin a upward rally against the Euro and the Pound.