It’s not often that sterling drops over 2% in the course of a working week, especially when the reasons for the weakening are so opaque. The last time was in September, but then there were clear reasons (over Brexit and Northern Irish arrangements).
However, this is what happened to sterling against the euro last week and it wasn’t much different for sterling against the US dollar.
The question now is whether the drop will continue or the pound will find some support. Sterling has started to make some gains early today but that cannot be guaranteed to continue.
There is very little on the data front to move the market this week, apart from Balance of Trade and industrial production early tomorrow.
Today is the day when UK pubs and cafes are able to serve customers again for the first time since December, but only outside, so of course there is currently snow falling in West London. However it has been heartening to see vast piles of cardboard and packaging outside local shops over the past few days as they restock for the grand reopening today.
The UK Transport Secretary Grant Shapps said on Friday that some overseas travel will restart on 17 May, but we are still waiting to see which countries are ranked ‘green’ and ‘amber’ allowing travel and which will remain ‘red’, with travel prohibited. Green and amber will mean you can travel back from there with a test (and some limited self-isolation for amber).
All looks set fair, therefore, for a very positive spring ahead of us, especially if sterling can stay as strong as it is today, nearly 3% above the average for the past year.
To lock in today’s rate, do call your trader on 020 8108 5163.
