15.07.202018:05 Forex Analysis & Reviews: Pound grows, but will soon face decline

The pound sterling began to strengthen against the backdrop of a weakening US dollar. Today's rate has stopped at around 1.26 dollars per pound. Meanwhile, it remains stable in relation to the euro.

The pound sterling is sensitive to all the changes that happen to the greenback, and it has recently been going through hard times. Risk appetite among investors is growing rapidly, which causes the dollar to sag, and the pound, in turn, to rise. However, in relation to the euro, the dynamics remain almost invisible. According to experts, sterling in the near future will nevertheless face a negative adjustment in its course, which will occur against the backdrop of a growing upheaval in the state's economy caused by the coronavirus pandemic.

To date, the value of the pound sterling has become higher by 0.5% and reached $ 1.2610 per pound. In relation to the euro, it settled at 90.75 pence, which is practically no different from the previous rate. Nevertheless, the fact that the pound was able to cope with a serious fall against the euro, which happened two weeks ago, is already causing positive emotions. Earlier the euro fell sharply to a minimum of 91.12 euros per pound.

Analysts continue to argue that UK macroeconomic indicators are among the worst in Europe. This will put serious pressure on the pound, which will inevitably backtrack. In the meantime, it has the opportunity to build up a greater advantage over the subsequent global decline.

Britain's secession from the EU only exacerbates the current situation, being an additional source of pressure.

The statistics on the country's GDP over the last month of spring were very unimpressive. The numbers were much lower than preliminary forecasts, which greatly upset investors. Now they are increasingly asking themselves the question: when will the government decide on a new portion of incentive measures that can support an economy that is rapidly falling into the abyss? The Central Bank of Great Britain is expected to expand the program of quantitative easing and lowering interest rates.

The yields on government bonds with a maturity of five years decreased significantly last week, so much so that it went into the zone below zero. However, as some analysts note, this is not the limit of the fall, in the near future, it is likely to get an even larger portion of the negative.

In the meantime, the pound's prospects are very vague, a trend for sale is forming in the foreign exchange market, which, most likely, cannot be avoided.