Although the Pound has recouped some of its recent losses prior to the Debt Management Office’s bond sale, industry experts believe that the currency could soon continue its downward trend.
The Pound Sterling Exchange Rate was in the region of 1.4973 against the US Dollar as of 10:35 am
After losing ground against a bullish US Dollar for five days the Pound experienced a modest rebound this morning, climbing against all of its most traded currency peers.
The Pound was able to advance by 0.4 per cent on the Euro and a modest 0.3 per cent on the US Dollar as investors began to query the currency’s recent rapid decline.
Yesterday Sterling slumped to fresh 2 ½ year lows against the US Dollar and Canadian Dollar. The British currency also languished at a 28-month low against the ‘Aussie’ after the Down Under Dollar broadly strengthened following a positive consumer confidence survey for Australia.
The Pound’s low levels prompted one financial journalist to assert: ‘The Pound is basically now worth a potato.’
Whilst there is nothing wrong with potatoes (everyone loves a good plate of mash after all) the Pound’s descent has caused some investors concern, and their questioning of its drop in the last few days has allowed Sterling to regain a little ground this morning.
However, other industry experts have argued that a weaker Pound is a positive in the long-term as it will make the UK more competitive in trade.
After the Pound’s upward turn London-based senior currency strategist Jane Foley commented: ‘There’s some position adjustment, people trying to pick the bottom because we have gone a long way and a lot of bad news is in the price. I would still favour selling the rallies in Sterling.’ She went on to recommend selling Sterling at around the 1.4950 Dollar level.
In Foley’s opinion GBP/USD could weaken further prior to the March 20th budget, presented by Chancellor of the Exchequer George Osborne next Wednesday.
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