Sterling drop continues
14 May, 2019
As we begin the new week, the price action on Sterling exchange rates has been very telling of the current sentiment. 10 days ago the pound rallied to near 2 year highs on rumours that cross party talks had made significant progress, however this speculation was quickly dampened and Sterling has now dropped for 6 successive days as fears of a parliament stalemate grow, which could very well lead to huge uncertainty around Theresa May’s position in the coming weeks. GBP/EUR is now trading close to a 2 month low and yesterday afternoon saw GBP/USD break through key support levels.
This morning we have the next eco stat for the UK to be announced, with the unemployment rate and average earnings figures due at 9:30am. The headline rate is expected to remain stable at 3.9%, although analysts are forecasting a 0.1% drop in average earnings from last month. Whilst data is having little impact on rates when isolated, any weaker figures only add to the current poor sentiment. Beyond this data this markets are eagerly awaiting an update from the Prime Minister with regards to the next direction of Brexit. This update is expected in the coming weeks but with no guarantees and no specific timeframes known. This week the PM will go back to the EU to discuss a potential future customs union deal that could revive the struggling talks with Labour.
The current conditions and levels of uncertainty make the market a very high risk one to be gambling with. If you have an imminent currency exchange to make, contact your currency consultant today for some expert guidance and how to manage or mitigate these risks in a way that is tailored to your personal circumstances.