Is The Pounds Rally Over
4 October, 2013
Yesterday we saw the slide of sterling continue following its drop on Wednesday after the ECB press conference. The ECB announced that interest rates would remain low or lower for the foreseeable in addition to announcing they would be lending money freely to European banks to help sure them up as economic recovery continued. This gave investors confidence in the single currency, so despite lowering of interest rates normally meaning a weaker currency, confidence shifted from sterling to the single currency.
The Euro gained a cent against the pound and US dollar, which we saw continue yesterday. The pound slid another cent against the Euro and having hit a fresh high against the dollar, the resistance was too strong and it bounced back down. Again this trend continued throughout Thursday trade despite the UK services PMI coming out better than expected.
We open this morning to a similar trend, the pound already dropping across the board so currency buyers should expect further losses today especially with a void of any UK data. There is EU inflation figures this morning and then a raft of US data this afternoon which includes the key non-farm payrolls and average earnings data. This can massively move the market if the figures, which they usually are, wildly different to forecast, so expect volatility this afternoon.
So if you have a transfer to make over the coming few days or weeks this could be the opportune moment to buy. The trend seems to be to the downside and with such gains made in such a short space of time for the pound, we have been predicting this correction for some time, in another week we could be a cent or two lower against most of the majors. Don’t delay, contact one of the brokers at Currency Index today to avoid missing out further.
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