Pound loses further ground

2 May, 2018

Nakhil Mahra

Yesterday saw the markets move heavily against GBP. Sterling currently the weakest currency in the markets, the USD that has been in free fall has found some momentum, gaining over 8 cents in the last 6 weeks against the Pound. Having hit a post-Brexit high, even touching levels seen before the referendum.

Even against the Euro, we have now lost 4 cents in as many weeks, the highs of early April now a distant memory. With the interest rate hike now unlikely this month, and early hints have been that we won’t see a rate hike until September. Should this be the case, we could see Sterling lose another 2% and continue its new downward trend. Continuing the recent economic stats trend, yesterday’s Manufacturing PMI came in lower than expected. Although above 50, suggesting the sector is growing but not at the rate expected. Any requirements coming up in the next months or two, a forward contract can be used to stop your costs increasing over the coming months.

Brexit update

Today Theresa May will host a Brexit cabinet meeting. Having suffered a loss on Monday giving parliament a meaningful vote in Brexit negotiations the pressure will be on her to swing things back in her favour. Further support was offered yesterday by Hammond to a customs partnership with the EU, suggesting the future is brighter with us in it rather than out. Any key updates could impact the markets so stay in touch with your account manager to keep on top of it all.

Today’s data

Today sees UK construction PMI at 9.30, another negative figure today could continue the downward trend and see you lose another 0.5 cents against the major pairings. Followed by USD non-farm employment at 1.15 and Crude Oil Inventories at 3.30.