Global Uncertainty creates knock on effect
Those with a bearish outlook on Sterling at present were vindicated yesterday as the Pound fell for the second day running. As global uncertainty and the Chinese economic slowdown continued to weigh on Sterling it was dealt an additional blow as European banking stocks fell heavily leaving Sterling exchange rates at their weakest levels in over a year and currently trading around 78 pence per Euro for the first time since January 2015.
Yesterday’s drops in both global equities and oil once again also dealt a blow to the US dollar as we saw the greenback hit a 4 month low on the USD index as louboutin stiefel investors move their money into safe havens such as the Swiss Franc, Japanese Yen and the Euro to a certain extent. The on-going slide in oil prices again weakened commodity currencies such as the Australian Dollar with the start of Chinese new year today perhaps providing some respite.
Will this negative trend continue for the Pound
We’ve seen a steady decline in Sterling’s value since the beginning of December last year with the currency losing over 3% of its value against the Euro which has benefited from reduced investor risk appetite. I can personally see the value of the Pound continue to decline as we approach the EU referendum promised by British Prime Minister David Cameron, and should the UK opt for an exit I see potential for further downside as further uncertainty and the potential intervention from the Bank of England’s monetary policy artificially reducing the value of the Pound in order to increase exports of Christian Louboutin Stiefel.
Yesterday we saw how Sterling strength during 2015 negatively affected exports as the UK trade balance widened in the final quarter of 2015, and I think this could play a role with the direction taken by the BoE’s monetary policy moving forward.
Today could be relatively quiet due to a lack of economic data releases although this evening Fed Chair Janet Yellen’s is due to give a speech which could create some volatility, particularly with regards to the USD so I’ll be keeping a close eye on that at 1:30 GMT. We also have NIESR GDP estimate figures coming out at 3pm later today, the GDP estimate released by the National Institute of Economic and Social Research is an estimate of growth over the last 3 months up to the report which comes out a month before the official announcement.