A poor week and start to the year has seen sterling continue to struggle against the US dollar. It has been relatively stable against the euro during the week but is struggling to get back to the six year high it saw, albeit briefly, last Friday. It isn’t a surprise to find the US dollar in the ascendancy given the expectation of increases in US interest rates. Against the euro though sterling seems to be better positioned as the Eurozone suffers but markets may be very wary in boosting sterling too much given the UK’s dependency on the Eurozone.
Monday and Tuesday saw the release of the UK Purchasing Manager Indices for the construction and services industries, which both came in below expectations. Data from the services industry was particularly disappointing, falling to the lowest levels since July 2013. Coupled with lingering uncertainty over the outcome of this year’s general election in May, sterling reached a fresh 18-month low against the US dollar on Thursday, although it rebounded during the afternoon amid thoughts that sterling may have been oversold.
Today sees the release of December’s UK manufacturing production figures, which are expected to post a figure of 0.4% growth following a disappointing contraction of 0.7% in November.
In this time of exchange rate uncertainty, we recommend calling your trader as soon as possible to find out the most up-to-date rates.