Sterlings Decline
Sterling hit a 2 1/2-month low against the euro on Thursday after data showed UK business investment fell by the most in almost a quarter of a century, reinforcing expectations interest rates will stay low for some time.
These reports offset surprisingly strong UK house price data and kept the idea of low Bank of England and market-based interest rates, which diminish the relative appeal of sterling-denominated assets, at the forefront of traders' minds.
As outlined in yesterdays report, it's this prediction of continued low rates in the UK, while EU and US rates may climb is what's keeping Sterling under pressure. This is unlikely to change in the near term.
We have had GDP data for the UK this morning, the monthly figures were better than expected, however the annual figures were as predicted. The only hope today for a climb in rates is a Friday afternoon run. When currency investors and speculators wind up their positions for the weekend, the result can often benefit key currencies such as the pound, although this is a long shot!
Signs of US Growth
US durable goods orders and new home sales both soared last month, the latest positive indications of the state of the world's largest economy. Orders for goods expected to last more than three years increased 4.9% in July, beating analyst expectations of a 3% gain, said the Commerce Department.
Durable goods orders were lifted by the popularity of the government's car scrappage scheme. This helped US car orders rise 0.9%, recovering from June and May falls. At the same time, the annual rate of sales of new US homes rose 9.6% last month, also ahead of market targets.
This has strengthened the US Dollar, and helped to push rates lower.
Summary
The pound is under severe pressure and the outlook is not good. Contact us today to discuss the implications of this weakness on your currency requirement. We can get you commercial rates that are up to 5% better than rates offered by the high street banks.
Consider the risk, and then open an account. Remember it's free to have a trading account, it doesnt obligate you, and simply means that you can obtain live quotes and see how much you can save.
Todays Data