2012 a distant memory

29 January, 2013

Graham Harborne

So far this year against both the euro and the dollar the pound has been falling on a daily basis losing as much as 5% since the beginning of the year. A raft of negative data (mainly the weak GDP data which could of course be revised up) from the UK has heaped pressure on the pound and David Cameron’s announcement that he will call for a referendum regarding the UK’s participation within Europe, has sent jitters throughout the markets and so the pound is not the currency anyone wants to be buying.

It’s hard to know how long this downward spiral will go on for and with very little UK data out this week market movements are likely to be determined by dockets from the Eurozone and the States. One thing that is worth noting is that the strong pound last year obviously affected our exports so it is likely that the weak pound we are seeing at the moment will help improve that sector of the UK economy. We may see further declines but I wouldn’t be surprised to see a recovery at some point as already there are murmurs from within Europe that a strong euro will have a similar effect on the Eurozone economy and no matter how glum things seem here they are from out of the woods in Europe so don’t be surprised to a see a lot of volatility between the majors over the coming months.

To make sure you can make the most of any sudden movements please do stay in contact with your account manager here at Currency Index.