Sterling again lost ground against its major pairings
9 August, 2019
Yesterday sterling again lost ground against its major pairings as Boris Johnson announced he would hold a General Election in the “days after” leaving the EU at the end of October. The Financial Times reported this as Johnson commented on what would happen if he lost a confidence vote over his handling of Brexit.
GBP/EUR fell to its lowest level in nearly two years in early afternoon trade and analysts were noted as saying sterling could drop further as the ongoing row developed over the UK’s departure from the EU.
That in mind, anyone with an upcoming currency purchase to make, might be well placed to look at booking a forward contract, negating the ever-increasing risk that the pound will lose further value as October draws nearer. We have already lost 4 cents in the last two weeks, making any upcoming property purchase a lot more expensive. For example on a property costing €250,000 would have cost around £224,000 at the end of July, but is now looking more around £232,500 – a significant difference. And with most of Europe closed over August, the likelihood of a completion happening before the end of the month is quite low, leaving buyers at the mercy of the currency markets.
On the data front, we had the US housing stats yesterday, which were a mixed bag, but overall came out over expectations. This helped the US dollar to make further gains against the struggling pound. today we are UK focussed as we wait for Q2 GDP at 9.30am. This comes with manufacturing and industrial production, total business investment figures and trade balance. Later from across the pond, we get US PPI data and Canadian employment figures.
Lots to go on and further sentiment led trading against sterling most likely so speak to one of the team today to discuss your upcoming requirements.