More loses expected for pound

10 March, 2017

More loses expected for pound

The British pound continued its downtrend today before recovering slightly against its European counterpart on the back of more Brexit woes and an upbeat speech by ECB President Mario Draghi.

Mr Draghi noted during his monetary speech, that things were on the up and the central bank doesn’t feel the need to extend its quantative easing program which it introduced in order to boost the economy.

He also noted that deflation was under control which had been a major headache for the European economy with investors now predicting that the next interest rate move will be up.

"The euro rallied after the ECB signaled it is in no rush to do more quantitative easing, Deflation is no longer the concern for the ECB, prices are not rising fast enough to warrant tapering or higher rates, but the imminent risk of deflation has passed. That's something of a watershed moment, the end of the beginning in terms of unconventional monetary policy tools, perhaps." Noted Neil Wilson, analyst at ETX Capital.

More Brexit worries have also pressured the pound over the last few trading sessions with the House of Lords voting for another amendment to the Brexit bill which has threatened to derail the whole process.

Such thoughts are like to keep a lid on any recovery for the pound in the nearest future,

Investors seem to have overlooked Wednesday's Spring Budget, with sellers simply exploiting the rising anxiety ahead of the Article 50 invocation to attack the pound on Thursday. Sterling may find itself under renewed rounds of selling if the Brexit uncertainties persist this month." said FXTM research analyst Lukman Otunuga.


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