Dollar slide fails to inspire sterling
By David Lamb, Head of Treasury Services at No1 Currency
Despite the US dollar falling to its lowest levels for the year against most of its major trading partners, sterling is lagging sadly behind as both macroeconomic and political news weigh on the currency.
With investor confidence in a global recovery seemingly rising by the day, further indications this week of the UK falling behind these recovery projections came from Bank of England Governor Mervyn King. He stated the Bank may cut the rate paid on deposits, noting this could be a ‘useful supplement’ to monetary policy which provides further evidence that the MPC are a long way off from the exit strategy from accommodative rates that appears to be the case elsewhere around the globe.
It could however be argued that this stance will put the UK on a firmer footing going forward should the world encounter the dreaded double dip recession that many feel is a receding possibility.
As things stand, sterling has fallen to a four month low against the euro which in turn is making 12 month highs against the dollar. Meanwhile, as the pound and dollar battle it out for the dubious accolade of being the weakest of the major currencies, sterling is trapped in the middle of the broad 3-month 1.58/1.70 range against the greenback but would appear biased to the downside following the 26% rise in value from January through to August.
For more information please contact David Lamb, Head of Treasury Services at No1 Currency on 0131 561 8416
