A Shocking Month For Sterling
1 February, 2013
As January drew to a close, the pound carried on, on the back foot as it has since the start of the year. Sentiment has gone for the pound, which was strong throughout 2012, as growth worries and more positivity in the Eurozone take over. As the start of February comes, this is unlikely to change so any currency buyers from sterling should be cautious holding out in the hope things pick up.
Most currencies remain around 5 percent down against the pound this morning although the US dollar is marching on following data released last night. The US Senate passed legislation allowing the government to keep borrowing until at least May 19th having passed the Republican House of Representatives already – next stop the bill is due to be signed by Obama today. This comes off the back of surprise negative GDP from the US on Wednesday which was expected to show a healthy 1 percent growth. Yesterday was the Fed interest rate decision which as expected, was unchanged and the tone for future policy was a cautious one. Cable opens this morning nearly half a cent down from yesterday.
Overnight the UK had some house price data released which showed a slight increase but nothing of note to give the pound much of a boost as the markets opened. While across in the Eurozone there has been a varied release of EU country data, most notably the German unemployment rate which fell by 16,000 last month.
So what for the month ahead? Well we have the US FED approving further spending while the ECB has been in the process of cutting spending over recent months, a stance which is likely to continue. This is going to be viewed as Euro positive against the US dollar which as we know from past has an effect on all other currencies. A strong euro compared to the dollar has been dragging the pound down too, so we shouldn’t be surprised if this trend continues.
With only manufacturing PMI data left for the UK today there isn’t much to help swing things whilst in the EU we also have manufacturing PMI along with unemployment and consumer price indices data. Across the pond, a raft of employment data comes out, including the all important non-farm payrolls. This is due at lunch time, followed later in the day by consumer sentiment index, construction spending and manufacturing PMI.
It’s likely the coming weeks will be rocky for sterling so get in touch with one of the brokers at Currency Index today to keep abreast of market changes relevant to your upcoming requirement.
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