Sterling sentiment continues to weigh on exchange rates
20 June, 2018
Tuesday provided no data releases to report on so instead markets were driven by current market sentiment and key technical levels. GBP/EUR continued to gradually erase all the gains seen last Thursday after the Euro was heavily weakened following the latest ECB meeting. This sell-off is very telling of the underlying sentiment towards Sterling as rates have failed to go any higher than the original spike on Thursday afternoon. Deep Brexit uncertainty, low inflation, low growth and the fear of further political complications continue to weigh heavy on the Pound.
The Pounds’ struggles have been far more evident against stronger currencies like the US Dollar, that yesterday hit a new low for 2018 with cable rates now down over 12 cents in just 2 months. With the Federal Reserve having raised rates again last week and looking to do 2 more times this year, it is difficult to imagine GBP/USD rates recovering back to the 1.40’s anytime soon.
The day ahead is again absent of any major eco-stats, a theme that will be common through to the end of the month. For the UK there is just one more big announcement left tomorrow with the latest Bank of England meeting, although very few analysts are holding any real optimism for the pound in the short term with rate hikes likely to be further delayed whilst Brexit uncertainties continues and Inflation continues to drop towards the 2% target. With the risk levels piling up for the pound, speak to your account manager today about a Forward Contract where you can guarantee an exchange rate for up to 2 years and remove the risk altogether.
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