Pound Falls Sharply
7 February, 2018
The Pound fell again yesterday, wiping out recent gains against the US dollar and Euro. Sterling reached its lowest level against the Euro since late November, and against the US Dollar since mid-January. Selling off in financial markets in the UK and Asia in the morning contributed to a change in sentiment, showing how vulnerable the Pound is to sudden changes in direction in the current climate.
With a lack of important economic data, only weaker than expected US Trade Balance figures for December sent the Dollar lower in the afternoon session, with rates for sending money to the USA improving somewhat before the close of European trading.
However, exchange rates against most currencies remain stronger than perhaps expected, with the Euro much cheaper than after the UK General Election last year. A €200,000 transfer is £7,000 cheaper today than in August, and a purchase of $200,000 now costs a staggering £16,000 less than a year ago.
The Pound was not helped by a leaked EU document proposing the suspension of “certain benefits” from the single market during the transitional period post-Brexit, should certain conditions not be met.
Quiet day ahead – Pound falls could continue
Today we have no important UK data due out, with the possible exception of Halifax’s UK house price data at 8.30am, and nothing significant elsewhere until 8pm when the New Zealand interest rate decision and statement are released. Interest rates for the Kiwi are likely to be held at 1.75%. Tomorrow however is a key day for the Bank of England, which is almost certain to hold interest rates in the UK at 0.5%, but the accompanying monetary policy summary, MPC vote and inflation report, could send the Pound swiftly off in one direction or the other. We finish the week with UK industrial and manufacturing production on Friday, as well as trade balance and a GDP estimate from the NIESR, so whether you are selling or buying Pounds, the second half of the week could see some more volatility.
With uncertain and volatile times ahead through 2018, it’s more important than ever to make sure you use a reputable currency broker such as Currency Index to help you with the efficiency of your international payments. Contact us to discuss your requirements and use us as an extra pair of eyes on the markets.
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