Sterling has been dropping in value against all major currencies since the EU referendum on 23rd June. We have also seen consistent poor UK data releases dragging Sterling value down further. The latest data releases were industrial production,manufacturing production and trade balance figures. Industrial production remained stable,but manufacturing production and trade balance data contracted. The worrying factor is that these figures are from June. We are yet to see the first post-brexit figures for July. These are due to be released in September and I think this is when we will start to see the real impact of the vote to leave the EU. Expect the pound to drop further.
The Bank of England (BOE) cut interest rates this month from the already record low of 0.5% to 0.25% and also introduced Quantitative Easing (QE) to the value of £60bn. (QE is essentially pumping money into an economy in order to stimulate growth, this generally weakens the currency in question.) Ian McCafferty a member of the Monetary Policy Committee (MPC) for the BOE has stated that if UK data continues to come in below par more monetary policy change will need to take place.
If you are selling Sterling, it would be wise to move sooner rather than later.
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