False dawn for the Pound

31 July, 2013

Robin Haynes

Much like the British summer, the Pound seems to have faltered in the last week, drifting slowly but surely lower since Q2 GDP figures were released in the absence of any further positive data. In the last week rates have dropped by nearly 2c for both GBP-EUR and GBP-USD.

Tomorrow sees the start of a new month and the usual raft of monthly news released, with both the European Central Bank and Bank of England announcing interest rates and the UK Quantitative Easing policy out tomorrow. While we are not expecting any major news, there is a sense that the markets are not yet familiar with UK monetary policy under the leadership of new Governor Mark Carney, and more QE cannot be ruled out despite last month’s unanimous decision to keep it on hold. Therefore a ‘hold’ on QE could give the Pound a slight positive push. In Europe the interest rate decision will be accompanied by President Draghi’s press conference which can move the single currency.

Today we only have European inflation (10am) and US GDP (1.30pm) of much interest. There is no UK data due out so sterling could well continue its slide back down.

A UK-wide survey yesterday showed that the average Brit has experienced a “small improvement” in happiness over the last 12 months, but with the rain returning, exchange rates are currently not helping those of you who are still looking to move to sunnier climes. If you are worried about the Pound falling further, don’t forget that Currency Index can fix and guarantee rates up to 2 years ahead to at least remove the uncertainty surrounding any forthcoming foreign exchange transaction.