Pound in the Doldrums

11 July, 2017

Sterling’s recent poor run has been largely driven by a string of poor data releases, so the fairly quiet week ahead for UK data releases is of some solace to those of you with Pounds in hand. Barring tomorrow’s unemployment release, we have an almost complete absence of data due in the UK. Today does see a high-profile speech from Theresa May on foreign policy, but this is not especially likely to provide ammunition either way for the Pound.

Those of you thinking that this might provide an opportunity for the Pound to claw back some of its recent losses could be right, but the absence of UK data is not echoed elsewhere, with a raft of data releases from both the Eurozone and US due out in the coming four days. European data particularly has been rather positive recently, leading many market watchers to speculate the ECB might be able to consider positive action in the form of lessening QE. Any more positive news, particularly tomorrow’s industrial production, Thursday’s German CPI inflation and Friday’s trade balance figures, could give further impetus to calls for ECB action, which in turn can only bring further Euro strength.

In the US things are less clear, with the US Dollar suffering recently too, however there are various speeches from Fed luminaries, including Janet Yellen, due over the next couple of days, and quite a few data releases too. Any sign of positivity could cause the Fed to consider further interest rate rises, which would give the Dollar a much-needed boost against its major counterparts.

If you have Sterling and you need to buy Euros, Dollars or one of the many other currencies Currency Index can offer, then it is a troubling time, with not much in the way of hope that the Pound is suddenly going to find support. The backdrop of Brexit negotiations, political uncertainty and ongoing economic doldrums are likely to continue for some time to come and as a result removing market risk, setting your cost and securing your currency is likely the best option. Speak to your dedicated account manager today, to discuss your options, and find out how a forward contract could help you.