Sterling falls yet again vs the Euro
With all the talk of interest rate hikes for the UK this year, until this week Sterling had rallied well against the Eur. Sterling remained supported by expectations that the Bank of England will raise interest rates in the coming months. However analysts said much of that was already priced in to the pound, leaving limited room for further gains.
Meanwhile, the euro has gained sharply after European Central Bank policymaker Axel Weber boosted the prospect of rising borrowing costs in the euro zone, saying the only way for interest rates to go was up. The stronger Euro became more expensive to purchase and this helped push rates lower yesterday.
"It is a broad risk aversion trade that is seeing a pullback in sterling," said Gavin Friend, currency analyst at nabCapital.
Oil Prices hit 30 month high
With Oil prices hitting a 30 month high yesterday, this has had an impact on various currencies. Risker assets such as Sterling have been hit, whereas safe haven currencies like the JPY, CHF have strengthened. Countries like Canada that export a lot of oil have seen their currency increase in value, while the US which is a large importer of oil has seen it's currency weaken.
We have GDP figures for the UK today which is likely to cause further volatility for Sterling. if the figures are higher than expected then we may see a slight recovery for Sterling. we also have service sector data from the UK, and the US in the afternoon releases GDP figures, so expect GBP/USD volatility today.
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