Pound Wobbles

25 May, 2017

Paul Newfield

Yesterday sterling dropped half a cent against both the Euro and USD during the day’s trading, in part due to a complete lack of any positive domestic data releases but it was largely down to a mixture of continued ill-sentiment and continued sell-off of the Pound, off the back of the Tory party’s “dementia tax”, with polls suggesting the Conservative lead has been cut significantly and Mario Draghi’s speech, which he gave early yesterday afternoon.

Euro up, Dollar down

Despite the ongoing and significant issues with the Greek bailout – the IMF and Euro states so far failing to bridge the Greek debt divide, with a risk of significant Euro weakness this summer, the ECB President has said that the EU is recovering nicely and that no changes to the monetary policy, put in place a few years ago, will change for the foreseeable as it has shown to be effective in the Eurozone’s recovery. This Eurocentric positivity helped push EUR-USD to one of its highest levels since September last year, partly assisted by a larger than expected drop in the price of crude oil, poor housing figures and the announcement that China, a country that is very much interwoven with US markets, has had their credit rating downgraded by Moody’s.

As if this wasn’t bad enough for the greenback it was put under even more pressure, later on yesterday evening, following the FOMC minutes, which stated that it would soon be a pertinent time to start reducing it’s $4.5t balance sheet – an easing of regulatory standards in the future, potentially bringing significant risk to financial stability.


As it is Ascension day in France, Germany and Switzerland, there is little in the way of major data releases, with UK GDP and mortgage approvals due this morning and US employment data this afternoon. Despite the shortage of data, there is still high risk of volatility due to the ongoing Brexit and the soon to be continued UK general election campaign, which resumes on Friday. We also have the OPEC meeting, where the 13 oil-rich member states coordinate and unify petrol policies. If you are thinking of buying currency, particularly Euros, sentiment certainly seems against the Pound, so it may be better to exchange sooner rather than later – call Currency Index today.