Sterling gains hindered

Yesterday we saw the pound trade sideways again as investors hold back ahead of the EU referendum and the lack of positive UK growth data.

In the morning industrial production figures came in short of expectations for the EU giving the pound some short legs to make gains against the single currency but it was when the Bank of England met at lunch time the pound had a short spike. The vote was unchanged, which was expected but it was more the attached comments regarding concerns a Brexit would cause the pound and the UK economy issues and the Banks stance is that the UK should remain within the UK to avoid years of uncertainty. These comments only add to those of David Cameron and Barack Obama who have both backed the Stay campaign which have helped support the pound. We saw multi week highs for the pound against the euro and US dollar after Obama urged it would be in Britain’s best interest to stay in the UK. We didn’t quite see the same enthusiasm this time round as the pounds gains were halted at key resistance levels against both the euro and dollar.

The gains were halted and after the peak the pound steadily dropped back across the board, showing there is very little which can support the pound at present. Despite poor import/export data from the US the dollar still managed to rally in the afternoon’s trade so those with a currency to buy with sterling might be wise to avoid holding out for an inch, as you could easily lose a mile in the process. Fixing before the referendum, sooner rather than later will remove all the potential risk from the equation, so speak to one of the team today to find out your options.

As the week draws to a close the UK lacks any eco stats to help it along the way. We start off in Germany with inflation and GDP along with GDP from a variety of EU countries alongside the actual overall EU GDP figure. Later on the US release retail sales and inflation. Plenty going on elsewhere so we are likely to end the week on a rocky sterling ship.