Pound falls as global growth forecasts are cut
7 October, 2015
The IMF yesterday cut its global growth forecasts for this year, from 3.3% to 3.1%, and reduced its forecast for next year at the same time. Much as the recent Asian stock market turmoil affected the Pound more than some other currencies, the IMF’s warnings about slowing global growth are bad news for the UK, which relies on cheap imported goods and high value service sector exports for its own economic fortunes. The World Bank also cut growth forecasts for the Asia Pacific region on Monday.
Sterling fell further against many currencies yesterday, and there are no obvious signs of any economic light at the end of the tunnel for falling exchange rates. Sterling has now lost over 6% of its value against the Euro since its peak in July, adding over £8,000 to the cost of a €200,000 property, and similarly over 4% of its value against the US Dollar.
There was some respite for US Dollar buyers yesterday, as the US trade balance figures came out worse than expected, sending the cost of the Greenback a little lower. ECB President Mario Draghi’s speech in the evening however had little effect on the Euro, in an otherwise quiet day for data releases.
Sterling also had a poor day against the Australian Dollar, as the Reserve Bank there kept interest rates on hold at 2% for the 5th month in a row. There had been murmurs of a further interest rate cut in Australia, so investors moved to buy the Aussie overnight when the announcement was made, pushing its price higher. While this is bad news for those of you sending money to Australia, we are still not far off post-crisis records for the GBP-AUD rate despite yesterday’s drop of nearly 2c.
Quiet day on the markets ahead?
We are not expecting huge volatility today, as we only have the Bank of Japan press conference, an ECB meeting and the unofficial UK GDP estimate of note on the calendar for today. We might expect recent trends to continue and to see the Pound drifting slowly lower if there is no material change to sentiment on the markets. However tomorrow brings us the monthly Bank of England interest rate decision and meeting minutes, as well as the European Central Bank’s monetary policy meeting, so we could be in for some more significant movement in rates then. Whether this will be in the right direction for your own transaction or not is of course unknown – but at Currency Index we can watch rates for you and keep you updated on any spikes so do get in touch for some assistance with your own currency transaction.
- 2020 (59)
- 2019 (190)
- 2018 (229)
- 2017 (253)
- 2016 (254)
- 2015 (253)
- 2014 (252)
- 2013 (287)
- 2012 (270)
- 2011 (576)
- Brexit deal to be done, or going, going, gone? 25 November, 2020
- Sterling starts the week down from the highs of last week 16 November, 2020
- Votes are in – albeit still being counted, will Donald trump Joe? 4 November, 2020
- No categories