Pound stable, but for how long?

14 March, 2018

Matthew Boyle

Amidst little major data this week the Pound has remained stable, but for how long? Yesterday’s Spring Budget Statement was relatively positive for the Pound hinting at a near end to fiscal austerity measures which proved positive for Sterling and helped it make small gains against the Euro and Dollar. This combined with some recent positive developments regarding Brexit have kept the Pound stable amidst little data and also with a currently strong single currency.

Recent news from the ECB that they are looking to downgrade, and perhaps end their ongoing Q.E programme saw the Euro strengthen, however then further suggestions that they would remain “cautious” saw it lose some the previously gained ground and allowed the Pound to hold. Equally, against the Dollar, a US inflation reading that came out as expected was if anything poor for the Greenback, as many are eyeing further interest rate hikes in the US – something which poor inflation does not support.

So, in essence, much of the recent stability has not been as a result of the Pound but rather as a result of events elsewhere. With ongoing Euro strength dependent upon how quickly they draw in their Q.E programme, and this looking like just a matter of time, how long can the Pound resist the strong Euro? And with the US poised for further interest rate hikes, is it a matter of time before the Greenback advances too?

With the main data of note today in the form of a speech from Mario Draghi (who is notorious for talking up the Euro) and US retail sales this afternoon which is expected to show growth, will we see the current rates erode from strong data elsewhere? If you don’t want to take the risk speak to your Currency Index account manager today for some friendly and professional guidance on how to protect your budget in such an uncertain market.