Friday, 8 August 2014

Pound falls further as US Airstrikes begin in Iraq

Friday 8th August 2014 
The Pound has continued to fall today, partly due to further disappointing economic UK data, and also market uncertainty due to the airstrikes this afternoon in Iraq.

UK Data causes Pound to drop further 


UK Trade Balance figures were released at 09:30am this morning, and they were worse than expected causing the Pound to fall. I had warned recently that exports may be affected by the recent strength of the Pound, and it seems this is what has happened. Earlier this week I warned there could well be a further drop in the Pound. 

Yesterday the Bank of England and European Central Bank both kept policy as expected and there wasn’t much of an effect on exchange rates. 

In a few weeks we will see if any members of the BoE voted for a rate hike. If they did, the Pound may recover slightly. 

US Airstrikes cause jitters in the markets 


Yesterday president Obama authorised air strikes in Iraq, and it hasn’t taken long for them to start. In the last few hours American aircraft have started pounding targets in northern Iraq. 

This combined with unrest across the Middle East in Iraq, Gaza, Syria and Libya has given investors lots of uncertainty. Global stock markets have fallen, the price of oil and gold has risen, and safe haven currencies have gained while riskier currencies are losing value. 

So the US Dollar has gained strength, the Pound has weakened, and as a result exchange rates have fallen a further basis point in a day. 

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