Quiet start to week sees Pounds losses continue
16 August, 2016
The last few weeks have been turbulent and very poor for the Pound, and yesterday amidst very little data was no different. Throughout the day it lost around a cent against both major currencies, the USD and EUR now taking it to new lows against both. Rates are currently the lowest they have been against the greenback in over 31 years and against the single currency for over 3 years. With uncertainty still overshadowing the pound and the looming fear of further monetary easing by the Bank of England later this year, the outlook I am afraid is not good. Many of the large banks are now predicting further losses this year with as much as a 4-5% further drop suggested by Christmas.
Should any of you have upcoming requirements to buy foreign currency from GBP you might like to speak to your Currency Index broker today for some friendly guidance on how to protect your rate for any upcoming purchases – we offer forward contracts which allows you to secure your rate now for future use – a great tool to protect you rate and any increase in cost.
Today is a much busier day in the way of data, in the early hours we had the Reserve Bank of Australia minutes which seemed to paint a slightly confusing picture around interest rates. The minutes said further rate cuts would be dependent upon the rate of economic growth but gave a slightly mixed message as to when they thought these levels would be hit, with some suggesting that perhaps there was an error in the minutes themselves. Certainly one to watch in the coming weeks for any further signals.
This morning we have a raft of Ecodata from the UK including retail price index, house price index, production price index and inflation data. With recent post Brexit results being so poor and following the Bank of England interest rate cut it will certainly be an interesting watch, and indeed if we see more poor figures expect the pound to take a further dive. We also have in the morning ZEW survey and trade data from Germany and the EU, with the focus shifting towards the US in the afternoon as they release inflation and manufacturing data of their own. Whilst poor figures here would perhaps offer some respite for the pound and its dropping rates, equally strong figures here will only continue the current spiral in rates.
Stay in close contact today if you have anything on the horizon as the currently volatile market and weak pound could see the cost of your foreign purchase continue to become more expensive, so don’t be caught out and give your Currency Index broker a call today.
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