Quiet week, first signs of a shift in currency sentiment

11 July, 2014

Tom Arnold

A fairly uneventful week draws to a close today, with very little data due at all and certainly nothing of any note. We have already had German CPI inflation out this morning, which came out exactly on expectations and barely caused a ripple in the currency market pond.

While there has been little news of massive significance this week, we have seen a few cracks appear in the previously untouchable Pound’s support. Firstly we had UK manufacturing and industrial numbers on Tuesday, which came in significantly lower than expected and caused Sterling to drop away across the board, and secondly we had a lower than anticipated set of house price figures yesterday. Both of these releases saw the Pound lose strength, albeit in both cases most of the strength was regained once the market had settled down, and overall sentiment took control once again.

What this shows is that the Pound is still considered the best bet, because the UK economy is still recovering well, but there is vulnerability. Sterling positive sentiment will not be ongoing if we get too many more negative data releases… Certainly some cause for concern for the Bank of England and its governor Mark Carney.

The Pound does though find itself about half a cent off the multi-year highs it had recently achieved against both the Euro and the US Dollar, so is still very well placed for those of you with a requirement to transfer funds overseas, but due to this vulnerability it is almost certainly worth exploring the possibility of locking your rate in. Please contact your CI account manager who will be able to explain how you can do this, even if you don’t need your currency immediately.