Sterling rates take a tumble
9 February, 2016
Yesterday we quite literally saw the continuation of a downward trend for the Pound as it took a tumble across the board, losing around 1% against both the Euro and Dollar, but the Pounds biggest loss was against the Yen where it took a 2% hit. With no significant data out to influence this movement, it highlights that market sentiment is strongly with the Euro and driving the pound down. Even with potential talks that the European Central Bank might make a further rate cut next month could mean we may see a potential short term spike in the rates. However, this could already be priced into the Euro, so should any spike occur it should be noted that it may only be very small and not one to pin your hopes onto.
There is so much investor uncertainty in the Sterling, with a recent background of poor data results coupled with the upcoming referendum which is now said to be held in June. No matter the outcome of the ‘Brexit’ the Pound is likely to suffer a hit and there is a very real chance that rates may push down even further. The Bank of England have said that financial institutions have started to insure themselves against the possibility of the Pound falling if votes result in Britain leaving the EU, The bank said that options markets are now pricing in the likelihood of “a significant depreciation of sterling against the euro and the dollar over the next year”.
Another quiet day on the data front today. UK Trade Balance data due to be posted at 9:30 this morning, German Trade Balance data being released ahead of our trading day at 7am, posting results of €18.8B and German Industrial Production posting results of -1.2.
If you have a transfer due in the coming months, now may be the time to consider booking in a forward contract with us, where you can fix your rate for up to 1 year in advance with only a 10% deposit before they plummet further. Contact us today to speak with one of our brokers for some friendly guidance.
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