Horrific week for the Pound draws to a close

This week has been one of the worse we have seen for the Pound in many months with losses against both the US Dollar and the Euro of around 4 cents. This is not because of a sudden turnaround in the quality of the data the UK economy is turning out – in fact most of the recent releases have been quite positive. It is almost entirely down to the overriding trends, which are being driven by the EU referendum in June.

There are other factors – political issues being the main one in the last week with the government under significant pressure thanks to both the Tata steel problems in Port Talbot and the revelations of David Cameron’s fathers exposure to investigation over the leaked Panama off-shore tax papers. While the main driver of the markets is definitely the referendum, these type of pressures definitely impact. David Cameron is already massively invested in the result of the referendum – any further pressure on his leadership, could make it even less likely he can survive a Brexit, especially with Boris Johnson seemingly waiting in the wings, and of course a change in Prime Minister and the tumult that brings is hardly likely to back a strong currency…

Today sees a variety of industrial and manufacturing data for the UK, together with the UK’s trade balance figures this morning, and then the UK GDP estimate this afternoon. There is not much in the way of critical data from the other key zones, so assuming the data continues to be fairly positive, we could see the Pound finish the week on a slightly better note.

As ever stay in close contact with your Currency Index account manager to be kept informed of exactly what is happening and what your options are ahead of your upcoming currency purchase.