Breathing space for Sterling as Yellen sends the Dollar down

30 March, 2016

Ashley Finill

Yesterday was the first day of trading in the UK for 4 days following the Easter break and the return to the market was a fairly quiet one. With limited data to go by the pound had a somewhat stagnant day. The pound seems to be receiving a natural recovery on the back of last week’s losses to both the Dollar and the Euro. This was evident as yesterday afternoon the US posted a positive figure and above expectation on consumer confidence recording an improved reading of 96.2 than the previous 94.0 and did not gain any ground on Sterling. Consumer confidence was also released in the Eurozone in Italy again posting a better figure from the previous number again same story with the Euro against the Pound. Late in the afternoon Head of the FED Janet Yellen delivered a damaging speech to the dollar as she hinted that growth this year is weaker than expected and in the future will proceed cautiously with interest rates in the future. The Dollar plummeted losing nearly 2 cents to sterling and over a cent to the Euro.

With the pound taking some much needed breathing space this may be a very good buying opportunity for all Euro and Dollar buyers as this could be short lived with the recent Sterling downfalls we have been experiencing since the turn of new year, so rather than these rates being viewed as a sign of good things to come it may become a case of grab it whilst you can.

Today see’s another quiet day on the market with no high profile data releases. The only significant data release to note is from Germany as they record Consumer inflation at 12.00pm. Consensus is that the figure will be bettered than the previous recording. Should this be the case then expect the Euro to thrive off of this and aid the Euro potentially dragging the Pound back from its current position. Thursday will mix things up in the respect of data as the unemployment rate comes out in Germany, Consumer inflation is released in the Eurozone, Mario Draghi also speaks on behalf of the ECB and finally Mark Carney speaks for the Bank of England so expect high volatility throughout the day and a possible decline for the pound as if the expectations are correct will support the Euro and will provide a surge against Sterling.

As always stay in close contact with you Currency Index account manager for all the latest information on the market.