Support for the pound weakened over the course of the last week as the initial boost from the government’s lockdown exit plan announcement faded.
Although forecasts had pointed towards an even sharper monthly contraction, GBP exchange rates failed to receive any particular relief.
The risk of the UK experiencing a double-dip recession left the pound biased to the downside as the odds of a negative fourth quarter growth rate rose.
As the ongoing tightening of Covid-19 social restrictions continues to hamper economic momentum, investors saw fresh reason to bet on a weak first quarter performance.
The mood towards the pound could sour further on Friday with the release of January’s manufacturing and services PMIs.
Another month of contraction for the service sector may push GBP exchange rates sharply lower across the board, given the significant role the sector still plays in the UK economy.
Unless the services PMI can avoid falling deeper into contraction territory at the start of 2021, the pound looks set to remain on the back foot against its rivals.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)