Pound Loses Further Ground

18 January, 2013

Tom Arnold

Concerns over the UK’s AAA credit rating and its ongoing level of involvement in the E.U saw rates drop to the lowest levels since April 2012. Indeed since January the 3rd, Bloomberg data shows that the pound has fallen by 3% and they suggest the 2013 could be a disappointing year for the UK. Some recovery may been seen when David Cameron makes his postponed address about the UK’s ongoing relationship with the E.U. However he himself has said that without major reform the U.K will slowly slip out of the E.U so it is quite possible that further losses may been seen in the future. The pound also suffered losses against the USD with rates falling to the lowest levels since 23rd November 2012 perhaps assisted by erosion in the GBP/EUR rate. With Reuters/Michigan US consumer sentiment data out later today, and being predicted as bullish (positive) the pound could continue to lose ground against the greenback as confidence is seemingly shifting away from the UK and back to the U.S who in the short term are avoiding the fiscal cliff. Some consolation can be drawn from these loses in that weaker exchange rates comes cheaper exports which may provide some much needed stimulus to the currently flagging UK economy. Elsewhere in the world Chinas GDP figures provided at least some boost for the global economy as this combined with positive U.S data saw world shares move to a 20 month high – providing some hope for global recovery. However interestingly Chinese GDP was down for the quarter- coming it at 2% instead of the forecasted 2.3%. With Japan recently announcing its stimulus plan is in part some of the economic rot experienced in the West spreading to the Far East? If you have any upcoming transfers to make please make sure you speak to your Currency Index broker- with the UK, Europe and the U.S battling recovery, and with Chinese GDP down and Japan in economic trouble it is a very volatile time – make sure you stay ahead of the market.