Private DCN Private DCN - Sterling

GBP: optimistic Draghi makes sterling slide against the euro

By Smart Currency March 10th, 2017

Despite the lack of economic data from the UK this week, sterling continued to weaken across the board and in the process broke through key psychological support levels against the euro.

Sterling was already on the back foot as the markets continued to decipher the Chancellor’s budget. The consensus was that there was a negative tone to the budget as the FTSE index fell during the morning.

There are sceptics who believe that as the budget wasn’t the most generous, which is understandable given the backdrop, the Bank of England may need to pick up the slack. This could mean a prolonged stay at record-low UK interest rates.

Meanwhile, during Thursday we saw sterling initially strengthen against the US dollar before retracing later on in the day. This was on the back of the press conference following the ECB meeting where Draghi’s greater optimism on the state of the Eurozone’s economy also boosted the euro.

Manufacturing and trade balance data will be released today, which may add to sterling volatility.

Sterling-dollar volatility may increase due to non-farm payrolls being released in the US. A positive figure is likely to cement a US interest rate hike next Wednesday.