Neil Davies, Head of Trading at PlutusFX, takes another look at Sterling:
There has been a spate of good news in the UK of late. The FTSE is back up close to the 7000 mark following the bid from Royal Dutch Shell to buy BG Group in a £47bn deal, boosting shares in BG by over 40%. Bid speculation sent other shares up.
Furthermore, the drilling for oil at Horse Hill is now showing potentially a huge find, indeed, the largest onshore discovery in 30 years. House prices continue to move forward, but not at a rate that will spark talk of a bubble, slowing to 8.1% year on year.
However, it is the negatives that are weighing on the value of Sterling. The value of goods exported by the UK fell to its lowest level in more than four years, with a sharp decline in exports to outside the EU. Election uncertainty will of course continue, particularly with the potential abolition of ‘non-dom’ status and mansion tax which could result in a flight of wealth from the UK.
Sterling is now down to USD/GBP 1.478 and GBP/EUR 1.375. The Bank of England rate decision will do nothing to aid Sterling, in fact the BoE will be doing nothing at all.