Tough times for the Pound

26 September, 2016

Tom Arnold

Last week was a very bad week for the Pound, with little data of importance coming out and the data that did come out not helping to provide any support for a now very out of favour Sterling. Rates for buying both Euros and Dollars have hit a one month low and with Brexit negotiations on the front page of the newspapers once again, we can expect the Pound to remain under pressure for some time to come.

The other reason for the Pound’s recent demise has been investors move towards higher yielding currencies, and last week the Dollar took centre stage. Would the Fed raise rates now and give those investors better returns or would they raise later in the year was the question on everyone’s lips and Janet Yellen and her team answered it on Wednesday evening with a hold for now, but a pretty firm indication that there would be a hike this year. The Dollar is already the favourite of the market, with Brexit and a weak European economic situation putting investors off the other majors, and despite the setback of “no raise” last week, the Dollar is still winning.

There is plenty of data and central bank comment due out this week to keep analysts busy:
RBA governor speech
UK mortgage approvals
US new home sales
ECB president speech

US service PMI
US consumer confidence survey

German consumer confidence survey
US durable goods orders
ECB president speech

BoJ governor speech
German unemployment rate
European consumer confidence survey
German CPI inflation
US jobless claims
US trade balance
UK consumer confidence

German retail sales
European CPI inflation

With little chance of the Pound finding any support from this raft of economic figures it is essential to stay in close contact with your Currency Index account manager, if you have an upcoming currency requirement and have Sterling in hand. Holding out for an “inevitable improvement” could be a very long wait and could risk losing even more than you have done recently – why not consider locking your rate in now, maybe using a forward contract.