Recovery for the Pound?
15 March, 2013
Yesterday was a good day for the pound as it made gains against all but 2 of its 16 major currency peers – perhaps most significantly against both the Dollar and the Euro. This will be welcomed by many as since the new year the pound has been largely decimated across the boards, with the Euro gaining 7% and the US Dollar over 5% since the New Year alone just to mention a couple.
Following European employment data which was revised to slightly under expectation the tide started to turn slowly on the recently flagging pound, which rose to its highest level against the single currency in over 10 days. Perhaps more interesting though is what happened against the US dollar – following speculation there will be heavy Qatar investment in UK infrastructure, which saw the pound gain the most against the greenback in a single day it has in 7 months- over 1%.
Has the pound turned the corner on its loses and will it start to show further recovery?
Yesterday saw some telling words from Bank of England Chief Mervyn King speaking to ITV news, who stated that the BoE are certainly “not looking to push sterling down” acknowledging that it has dropped sharply in recent times and that this has encouraged exports, adding that he now feels the pound is broadly stable and that recovery is sight. It should be noted though that King himself voted for a further 25 billion of Quantitative Easing to add to the current 375 Billion bond buying programme.
Perhaps therefore these comments and the minor recovery shown yesterday by the pound should be taken with a pinch of salt. Indeed many analysts are still advising to be extremely wary of further sterling losses and by no means is the UK out of the woods in terms of economic recovery, with the fear of further Q.E and the speed at which it could dilute the pound ever looming.
Certainly if you have any currency transfers to make or if you are buying a property overseas, do make sure you speak to your Currency Index broker as soon as possible to stay well informed and ensure you stay ahead of the markets.
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