Election Woes Build

6 May, 2015

Matthew Boyle

Yesterday saw further losses for GBP against Euro as we near closer to the election and the fear of uncertainty builds. In what was a quiet day for data apart from the U.S this allowed a continuation of last week’s sentiment drive the market. With no data from the Eurozone or UK we saw a continuation of last week’s trend which saw GBP lose almost 4 cents in 2 days against EUR. Albeit the loss was not as great after an initial surprising surge in rates by the end of the day’s trading GBP had lost a cent against the single currency, with many predicting further losses over the coming days.

With the only data of note coming from the US it was largely the greenback that dominated the day’s trading and movements. With poorer than expected results for the U.S trade balance and Markit services PMI data, this saw the dollar weaken despite a positive result in ISM non manufacturing. Perhaps still reeling from last week’s comments by the FED delaying a suggested interest rate hike till at least September now it would seem, the dollar lost ground throughout the day and by the close of play had lost around a cent against both GBP and EUR.

As always this if anything only aided the Euros advances against the pound as the weak dollar helped push strength into the single currency in a market that is currently largely dominated by EUR/USD rates.

Today is a much busier day in the way of data releases, with the morning largely being dominated by Eurozone data. Early on we have the ECB non-monetary policy committee meeting followed by a raft of various Euro PMI data and also Eurozone retail sales. From the UK the only piece of data we have is PMI Markit services, so with little to fight back here any positive data from Europe could see the slide continue and indeed accelerate as we move to within touching distance of the election. In the afternoon the focus shifts across the pond to the U.S with unemployment, non-farms and crude stocks data.

Take note that this could spell dark times for GBP as with the election moving ever-closer and positive USD result could cause a push against GBP, whilst a negative result could push further Euro strength – sadly a potential lose-lose situation for the Pound.

Without doubt with the election so close it is highly unlikely we will see any GBP strength and indeed with nerves now beginning to reach fever pitch, if data is GBP negative we could see rates slide faster than we have to date.

Any of you with upcoming purchases from GBP in the near future or those of you that have been holding off would be well advised to speak your Currency Index broker today for some professional guidance on how to avoid being caught out on your transfer, regardless of who your preference is come Thursday!