How Much Further Will Sterling Retreat
24 October, 2013
Midweek and it was much of the same for the Pound, which we saw lose ground across the board yet again. The drop came as the markets opened at 8am and despite nothing sinister from the Bank of England minutes, sterling had little to go on and did very little throughout the day, trading in a very thin range against the majors.
The only currency to actually weaken against the Pound was the Aussie dollar which lost 2 cents overnight. This was down to higher inflation figures which came out well above the expectation and more than likely gives investors the idea that the RBA could yet again have scope for further interest rate cuts, which had been forgotten in recent months after a few surprise cuts earlier in the year.
Thursday is a quiet day for the GBP on the data front with only CBI industrial trends out this morning just before lunch, although this isn’t a key release. As we write, the Eurozone including Germany is releasing their manufacturing and services PMI figures, key indicators on the strength of the economy, which so far are coming out under forecast, but still above the 50 mark which indicates growth in the sectors. The euro is losing ground against the dollar, but not so much against a less in favour Pound.
At lunch, the US markets awake to a raft of data covering new home sales, trade balance, manufacturing PMI and jobless claims – a real mixed bag in one day, having been missed earlier in the month due to the government shutdown. Could the dollar slide continue? We saw the euro climb to a two year high against the greenback on Tuesday and still see the pound trading at multi-month highs, so great for anyone moving money stateside form this side of the Atlantic.
As the trading day draws to a close, Mark Carney, the BoE governor makes a speech, which will be insightful to the Banks policy going forward. Unfortunately, we won’t see the effects of this until Friday morning to see what effect the US and Asian markets have made of his comments overnight. With that in mind, and the fact we have seen a near 3 cent drop in exchange rates for buying euros over the past week, it may well be worth speaking to one of the team here at Currency Index today and securing your funds before the speech this afternoon.
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