Sterling continues to be the poor relation | Smart Daily Currency Note
GBP/USD – 1.5542
After a stronger performance last week, sterling has struggled over the past few days – continuing on its recent run of form, weakening against the majority of its major trading partners including dropping to a fresh 6 month low against the US dollar. Sterling recovered slightly against the euro on Thursday following the news that the euro-area recession has deepened, erasing hopes that the EU economy is headed in the right direction. This week started with a report which showed that business confidence in the UK had hit a record low and Consumer Price Index (CPI) data came out as expected with a 2.7% increase. Sterling was sold off sharply on Wednesday following the comments from the Governor of the Bank of England where he suggested the UK faced “big challenges” ahead. Moreover, the Confederation of British Industry (CBI) lowered its growth forecasts for 2013 from 1.4% to 1%. Today sees the release of Retail Sales data, a primary gauge of consumer spending and one hopes this release will bring us some positive news – current projections are suggesting growth of 0.5%. Get in touch for an up to the second price, and more news.
It has been a mixed week for the euro this week. The early part of the week saw somewhat unjustified confidence in the Eurozone benefit the euro, but yesterday saw the rug pulled from underneath it. A whole swathe of data releases, including GDP data from the French and German core of Europe, came in below even pessimistic forecasts. The poor fundamentals highlighted how unjustified the recent strength in the euro has been, and it came crashing down to a 3 week low against the dollar. However, continued weakness in sterling meant the euro remained fairly flat against sterling trading in the 1.16 range for most of the day. Today the G20 talks start in Moscow with the “currency war” on top of the agenda, so expect the PR to begin again, whether markets react to it this as strongly as they have done in recent times remains to be seen. Get in touch now for the latest news and quotes.