Sterling one of the worst performing currencies so far in 2016
Sterling bulls have been dealt a number of blows in recent weeks with the currency making financial headlines for all the wrong reasons. GBPEUR levels are currently trading around their worst levels in almost a year and the Pound wasn’t helped last week as the Bank of England’s dovish inflation report continued to put pressure on the currency.
Last Thursday (known as ‘Super Thursday’ due to the large volume of economic data released) saw the Bank of England (BoE) release a report cutting growth forecasts from 2.5% down to 2.2% for 2016, whilst also cutting growth forecasts for 2017 down to 2.3% down from a previous figure of 2.6%.
Will the negative trend continue for Sterling?
I expect the dovish comments from the BoE last week coupled with the increasing uncertainty surrounding the potential for a ‘Brexit’ to continue to weigh on Sterling’s value. Additionally economic data coming out of the UK this week could apply further pressure to the value of the Pound, with the release of Industrial Production and Manufacturing data (which hit 6 year lows last month) being released on Wednesday, as well as the NIESR (National Institute of Economic and Social Research) GDP estimate for the past 3 months which could signal a further slowdown in line with global markets once again negatively impacting the value of the Pound.
Over the upcoming week I cannot personally see the Euro’s strong run versus the Pound running out of stream unless we’re presented with substantially weak data coming out of Europe with Friday being the key day as German, Italian and Eurozone Gross Domestic Product figures are due out.
Should you be looking to avoid volatility it may be a good idea to complete any currency conversions you have earlier in the week as opposed to later due to the above GDP figure releases having the potential to move markets quite sharply.