Pound hits 30-year low against Dollar
The Sterling sell off continued on Monday as the uncertainty surrounding the political stability of the UK has clearly panicked investors. The Pound fell to fresh lows against the Dollar as the negative sentiment caused the pair to break below the 1.3150 level.
To further highlight the severity of the situation, Standard & Poor’s cut the UK credit rating to ‘AA’ from ‘AAA’, maintaining a negative outlook. This is the first time the ratings agency has cut an ‘AAA’ rating by two notches in one go.
This morning, GBPUSD opens back above 1.3250. There is a quiet economic calendar for the UK today so Sterling will be driven by other factors again. News will focus on the political uncertainty in the UK this week with the Conservative leadership contest set to kick off tomorrow, whilst Labour party leader Corbyn is facing a vote of no confidence.
In the US, the Goods Trade balance for May missed expectations, coming in at -$60.59B against the consensus of -$59.10B. The Markit Services PMI also missed the mark, falling below the 52.0 the market had predicted. However, the data released was at 51.3 – any release above 50 is a sign of an improving sector.
Overall, the Dollar steadied on Monday, posting gains against the Pound and closing the day fractionally lower against the Euro. There was further speculation that there could be a cut in Fed interest rates rather than an increase, which seemed to curtail the Dollar buying.
Today’s EU summit will mean further volatility for the Eurozone currency as EU leaders will look to establish a plan for life without the U.K. This will then be followed by a second European Central Bank (ECB) meeting
Data to watch: 12.30pm US Q1 GDP. 2pm US CB Consumer confidence.