Pound loses further ground
30 January, 2013
The story of the last couple of weeks – weak Sterling, strong Dollar, very strong Euro – looks set to continue with sentiment very much in the driving seat. We have already had Spanish GDP out this morning, and it was awful – a contraction in the Spanish economy of 1.8% YoY – the Euro’s reaction? It strengthened against both Sterling and the Dollar by almost 0.25%… this just goes to show that when market sentiment is fixed – many analysts are describing the Euro as “unstoppable” at the moment – then daily data releases aren’t necessarily all important.
That’s not to say that we should ignore data releases – the Pound desperately needs a boost from somewhere – could today’s mortgage approval figures due out at 9.30am be that positive spark? With the UK economy very dependent on our housing market, it is the type of release that could help if it is positive – yesterday we saw some figures showing house prices were broadly improving, so there is a glimmer of hope.
In the US we have some big data releases later on today with both GDP figures and the Federal Reserve’s monthly interest rate decision and policy statement. The Dollar has performed much better recently following the US’s avoidance of the dreaded fiscal cliff, but don’t forget many of the big spending cut decisions have only been kicked down the road for a couple of months, so the Dollar could still be vulnerable if investors start to focus back on Obama’s policies rather than the glitz and glamour of the inauguration.
What does this all mean for your upcoming currency purchase? Well for anyone buying Euros – biting the bullet is probably your best bet, with an unstoppable Euro, the rate seems destined to continue its recent movement. For those sending US Dollars, there may be some opportunities to buck the recent trend with these big releases coming out – either way, stay in close touch with your CI account manager to be kept up to date with what’s happening in the markets.
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