The pound gained 0.2% on the dollar yesterday despite falling to a two-year low earlier in the day. The British currency remains under pressure from a struggling economy, the threat of a no-deal Brexit and an interest rate cut later this year. Some analysts believe that the issues currently facing the UK economy have not been this bad since the global financial crisis. There is potential for the pound to dip lower in September when UK Parliament reconvenes after the summer break.
The pound has lost 1% against the euro this month and more than 2% against the dollar, its on track for its biggest monthly loss since June last year and makes it this year’s worst performing G10 currency. Some analysts believe the pound will fall as low as $1.10 in the event of a no-deal. Markets are largely shrugging off economic data at this point.
GBPUSD opened at 1.2398 after an early morning drop before spending most of the day making small gains to close at a high of 1.2449
GBPEUR opened at 1.1062 and was steady for the morning before making slight gains in the afternoon to close at a high of 1.1089
The dollar weakened slightly against most major currencies with the US bond yields lowering and the continued expectation that the Federal Reserve will lower interest rates. Earlier in the day it had gained after strong retail sales data. There is also some uncertainty whether or not the White House would attempt to weaken the greenback after President Donald Trump commented on Twitter that the US should also take part in the “big currency manipulation game” that he accuses China and Europe of being part of.
The International Monetary Fund has also said the dollar was overvalued between 6-12% while the euro and yen were correctly priced. The euro fell earlier in the day before recovering to gain 0.1% against the dollar on the day. The index that tracks the dollar against the euro, yen and pound was down 0.2%.
EURUSD opened at 1.1209 and climbed intermittently across the day to close at 1.1226