The Pound Sterling edged higher against the US Dollar as risk sentiment improved across the globe, however analysts point out that any gains are likely limited as investors consider the likely impact of the Brexit. Markets are also focusing on the upcoming growth figures for Q3 for the UK, with expectations that the economy will only have grown at about 0.3%, slowing from the 0.7% posted in Q2. Though a decline is forecast, any disappointment in the GDP readings are likely to further weigh on the Pound Sterling.
As reported at 10:48 am (BST) in London, the GBP/USD was trading higher at $1.2235, a gain of 0.02%; earlier the paid had hit a session peak of $1.2249 while the daily low was established at $1.2182. The EUR/GBP was down 0.04% at 0.8895 Pence while today’s trading range was established at 0.8886 Pence at the low end and 0.8913 Pence at the top end.
Hard Brexit Worries Growing
Since June 23rd, the date of the Brexit referendum, the Pound has lost nearly 18% of its value against the greenback, with much of the losses coming this month on worries over a “hard” Brexit. In that scenario, immigration controls would take precedence over free trade, making it harder for the government to fund its current account which is already at a huge deficit. Some analysts are saying that foreign investors could demand more incentive, i.e. an extra premium, before they’re willing to purchase gilts.