GBP/USD
The Pound still finds itself trapped in a steep decline against the Dollar, now making for its 6th consecutive day of decline. Following these huge losses that the Pound has experienced recently, the rate now finds itself sitting down at the lowest level it has experienced since all the way back in July 2020. It is evident that the Pound is under intense pressure not only against the Dollar but most of its peers, as shown by its poor performance in the markets. This downwards shift by Sterling can be narrowed down to two main things: a decline in market sentiment and concerns over the UK economy. As long as global markets and investor sentiment remains under pressure, so too will the Pound. At present investors are concerned that China’s economy is about to halt which will negatively impact on global growth rates, thereby hitting investor sentiment. As said above, concerns over the UK economy have risen as an array of recent economic data releases from the UK recently have failed to meet expectations. The Dollar on the other hand has successfully managed to remain in high demand throughout this period, making it increasingly difficult for the Pound to climb against it. It is expected that this current downwards trend will continue as the Dollar is expected to remain in the spotlight for the time being.
GBP/EUR
Yesterday we saw the rate plummet down to monthly lows as the Pound struggled to sustain its climb against the Euro. As for today, the Pound has picked itself up again and is currently trying to erase some of its losses, but it is likely that this movement will soon run out of steam as the Pound faces its own difficulties. Until sentiment improves for the UK economy it is likely that gains from the Pound will face strong headwinds and be very limited. Tomorrow Bank of England Governor Andrew Bailey is set to deliver a speech, but with him previously striking a dovish tone this could increase the difficulty for the Pound. As for other economic data, the UK is particularly quiet for the rest of the week meaning that the Pound may find itself even more vulnerable. Looking at the Euro, its recent gains against the Pound have slowed down slightly as markets anticipate the heavy load of data expected from the Eurozone on Friday regarding inflation and GDP growth. If this data turns out to be favourable, the jump in strength by the Euro is expected to be quite significant due to the importance of the data.
Published by Frank Brightman (27/04/2022)