The Pound Sterling inched lower versus the US Dollar in Thursday trading as uncertainty grows over Britain’s exit from the European Union. Those investor concerns are even outweighing evidence of the UK’s economic resilience in the face of the Brexit. Yesterday, the UK PMI report for the services sector, which is critical to the UK’s economic growth, was better than expected with a reading of 55.0 in March against forecasts of a minimal rise to 53.5 from February’s 53.3.
As reported at 10:52 am (BST) in London, the GBP/USD was trading at $1.2476, down 0.10%; the pair earlier hit a low of $1.2457 while the session peak was set at $1.2500. The EUR/GBP was up 0.125% to trade at 0.8551 Pence, not far off the session high of 0.8556 Pence.
Negotiations Not Viewed as Favorable in Short Term
What Britons are concerned about is that the EU or Britain might soften their negotiating position which would negatively impact the UK economy. One currency strategist in Japan said that the view could begin to favor Sterling only when they know that the EU is willing to give the UK a positive deal on financial services. Many believe that the initial stages of the negotiations are likely to be fruitless and it won’t be until mid-May before any assurances are given from either side. Since the vote last June to leave the EU, the Pound Sterling has lost about 20% of its value versus the greenback and FX traders have remained largely bearish.