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Is The Pound Set To Drop Further?

Is The Pound Set To Drop Further?

Although this is a shorter week than normal, there is lots for the markets to be looking at and we should anticipate another week of volatility.

Sterling fell last week for the third week in four as the probable lack of movement in interest rates and a disappointing CPI inflation report have sent the GBP tumbling. With David Cameron having an audience with the Queen today in order to dissolve Parliament ahead of the May 7th election, expect more weakness in the Pound. Markets do not like uncertainty and with no one really knowing how these elections are going to pan out, expect opinion polls to move the markets a fair bit.

In Europe, Greece submitted its latest reforms list on Friday with the notion that they are ready to negotiate with the EU, ECB and IMF, but want to use the reforms to prove that Greece can return to growth without harming the society and not just through austerity measures.There is a sentiment of negotiation and clearly both sides would prefer to avoid a Grexit but this still cannot be dismissed out of hand.

In the US, Janet Yellen has suggested that an interest rate hike is going to happen this year, although this is hardly a bolt from the blue. She said that this hike is warranted by market conditions and would not hurt the economy although growth may slow somewhat. All eyes are now focussed on Friday’s Non Farm Payrolls Data which is conveniently when markets are closed for the Easter weekend.

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