Pound shaky as market largely driven by strong USD and German political unrest
19 June, 2018
The Pound remained shaky during yesterday’s trading – at the lowest point it had lost around ¾ of a cent against the single currency but closed the day on around a half a cent loss. Against the currently extremely strong Dollar, it lost almost a whole cent, as the Greenback only continues its dominant march across the board.
EUR>USD is now testing the lowest rates we have seen in around a year, and this is certainly influencing GBP>EUR rates. It could be argued that the see-saw effect is keeping GBP>EUR rates artificially high, as the strong USD is encouraging a weak Euro, with the Pound firmly sat in the centre. Which does raise concerns over EUR buying rates if the Dollar should start to weaken. Given the massive and rapid gains we have seen recently from the Dollar, this would not be a huge surprise. To add to this, political unrest in Germany surrounding the migrant crisis, and fears that Angela Markel’s coalition government may be toppled is keeping the Euro weak. Unsurprising then that we are seeing USD/EUR rates where they are, but also concerning therefore that we are seeing the Euro gain against the Pound in a backdrop of uncertainty.
So, either a weak Dollar or resolution in Germany could see rates for buying Euros quickly drop. Given that we are only just under a cent off the best GBP>EUR in over 12 months now, readers might like to take advantage before the Euro finds feet, or Brexit uncertainty takes hold again.
Albeit perhaps a risk should the German government topple, however, we would likely see the peak GBP>EUR rates of last May available again. The next few days will be a busy one on the market, as we have several key speeches and releases that will likely see rates move. Today and tomorrow we have ECB and FED announcements which pose hurdles for the Pound, as the USD is steamrolling the market currently, and historically Draghi is always good at talking the Euro up.
On Thursday we have several Bank of England announcements, including the Interest rate decision and MPC vote. Whilst no change is expected here, traders will be keenly watching for any clues in Carney’s statement, as in recent months talk of a UK interest rate hike has been largely on-off. With several hurdles over the coming days, you may like to stay in close contact with your Currency Index account manager, as no doubt we will be in for a bumpy ride as the 3 major banks go head to head.
- 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