Sterling has started off on the back-foot this morning and unfortunately for those planning on converting Pounds into another currency in the short term future, today’s prices are more expensive than yesterday.
The reason for the fall in the Pound’s value is likely due to investors being cautious in the lead up to what was today’s main news release out of the UK. The data for the July figure of UK public sector borrowing was released at 9:30am this morning with analysts generally expecting to see an improvement on the previous month’s figure which came out higher than expected. Analysts were not disappointed as the figure released was better than expected at £-0.760B.
Interestingly the Pound to Euro rate hit a new 8-month low of 1.0903 this morning. Investors will be keeping a close eye on this key psychological level as they did with the 1.10 mark. If the current 1.09 support breaks I think there is a chance we could see the Pound sold off quite drastically, especially now that a number of key institutions have outlined forecasts of parity between the pair during 2018.
Later this week on Thursday the Pound could also find itself fluctuating as UK GDP figures for the month of July will be released. The year-on-year expectation is for a figure of 1.7% so expect any deviations from this figure to result in movement for Sterling exchange rates.
Those following the Pound’s value at the moment should be aware that Morgan Stanley, Citi and HSBC have all predicted parity for GBP/EUR next year, and with cable (GBP/USD) trading not far from a 30 year low the situation for the Pound is not great although the rates have been lower than their current levels.