When will Sterling Recover? (Daniel Charles Johnson)

Oil Prices and Brexit Casuing Volatility for Pound to Canadian Dollar Exchange Rates

We have seen Sterling fall in value significantly against all major currency pairings following the EU referendum and we have seen further falls following the Bank f England (BOE) interest rate decision last Thursday. The base rate was dropped from the already record low of 0.5% to 0.25%. and further Quantitative Easing (QE) was also introduced to the value of €70bn. QE is essentially pumping money into an economy in order to stimulate growth. It traditionally weakens the currency in question. Apologies for the pessimism, but I feel things may get worse. I think the full impact of the “Brexit” vote is yet to fully filter through in  UK data a releases and I think we will see negative data for the coming months which will weaken the Pound. It may be wise to move sooner rather than later if you are a CAD buyer. I think Sterling is under valued, but  I think it could be up to six months before we see any significant Sterling rally.

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