Pound under continued fire

Yesterday was a tough day for the pound as it lost significant ground against both the Dollar and the Euro.

This is likely the market moving prior to the much anticipated release of the Bank of England’s minutes today which will show the result of the first vote by the MPC under new chief Mark Carney, giving a huge insight to the foundation of ongoing policy for but also the likelihood of further Q.E for the UK. Whilst the last minutes kept interest rates at a record low of 0.5% and showed no change to the vote on the current 375 billion stimulus package, many feel that a change to policy is imminent and as such is causing movement in the rates. Indeed policy maker Paul Fisher said yesterday that “the unwinding of stimulus in the UK could be years in the future”.

As a result the pound dropped 0.3% against the dollar, moving closer again to the near 3 year lows seen on July 9th, whilst also losing ground against the Euro with it dropping to the weakest it has been since March 13th. Interestingly last month the pound lost 1.5% according to the Bloomberg correlated-weighted indexes, whilst the dollar rose 2.9% and the Euro rose 1%. This would certainly fit in with the recent behaviour of GBP/EUR and GBP/USD rates over the past months, and it seems that of the three majors the pound is still bottom of the bunch.

I would advise if you have any upcoming transfers that involve GBP to speak to your Currency Index broker asap. With the publishing of the Bank of England minutes today, along with UK unemployment data, we are likely to see a busy day in the market. Later today we also have the Fed beige book – a telling marker of US economic growth and recovery, which given the U.S Dollars recent strength could only add to the woes of the pound.

Furthermore If you are buying Euros or Dollars you might be well advised to consider a forward contract and lock in the exchange rate – with the ongoing downward trends you don’t want to be caught out in a costly slide of rates. So speak to your Currency Index broker today who can help you stay well informed and well ahead of the markets.