The pound (GBP) has fallen significantly this morning, hitting an eight-month low against the US dollar (USD).
Why has sterling weakened?
The drop in sterling was primarily due to early warnings that Brexit negotiations are failing to progress, as reported by the BBC, combined with doubts surrounding the Bank of England’s willingness to raise interest rates at all in 2018 which caused some uncertainty yet again.
Also contributing to sterling’s weakness were corporate warnings from the likes of Airbus on the chaos being caused by the lack of clarity on the progress of Brexit negotiations. Comments earlier this week from British Foreign Secretary Boris Johnson and his “four-letter reply” about the effects this is currently having on business has also done little to help confidence. With the British Cabinet descending into infighting, the fear is that this situation will only get worse so has seen many investors and supporters of sterling wavering in confidence.
How can you reduce the risk of currency fluctuations?
Currency movements can be a dangerous game to predict as there are so many moving parts which can cause fluctuations and changes in confidence. Anyone from huge investors to those looking to make a transfer overseas should be looking to bring some certainty to their upcoming transfers, which we can help with.
If you are looking to make a large currency trade this summer, I would urge you to speak to your trader to find out about your options on how you can protect yourself against these currency movements.