Sterling is in a terrible spot at present, languishing in the 1.11s on GBP/EUR at present. There are so many catalysts for Sterling’s weakness it will be very difficult to see any significant rally. We are now starting to witness the damage caused by the vote to leave the EU. Inflation in the UK has been on a rapid rise of late hitting 2.9%. There was the chance that the Bank of England were going to raise interest rates should the rise continue. The rumors of a rate hike had caused a bout of Sterling strength, but the latest figures saw a fall to 2.6% and the chances of a hike were diminished and the pound fell in value as a result.
Personally, I feel a rate hike is not a solution to the inflation problem and a drop in the data brings it closer to average wage growth at 1.8%. Which is a good thing. If average wage growth does not keep up with inflation, consumers will be more reluctant to spend and the UK could face a recession.
The International Monetary Fund (IMF) has recently downgraded the UK’s growth forecast which has not helped matters. Fifteen conservative MPs have signed a document supporting a vote of no confidence in Theresa May’s role. Political uncertainty historically weakens the currency in question.
Perhaps the biggest problem is the lack of direction in regards to Brexit negotiations, Hard or Soft Brexit. No doubt compromises will have to be made.
UK GDP Data
UK GDP data is due in this morning at 9.30 and could cause volatility on GBP/EUR, expectations are for a small increase. If there is a fall Sterling could lose further value.
If you have a currency trade to perform I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have confidence knowing you will be dealing with a brokerage in business for over 16yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving. I can be contacted at firstname.lastname@example.org . (Daniel Johnson) Thank you for reading.