The Pound continues to be subdued

Hi everyone,

Sterling has been moving sideways against the majority of currencies the last few days, in a week that hasn't seen much activity at all. This changes tonight with the Fed rate followed by two-days of important data releases from the EU & US. 

A handful of analysts are suggesting the lacklustre performance of the £ recently could be linked to the imminent Scottish elections. Some believe the 6th of May to be an 'event risk' to Sterling if pro-independence parties receive strong results. Back in 2014, the Pound declined in the build up to the Scottish independence referendum. As soon as the independence movement was defeated, Sterling rallied sharply. This confirms the £ trades at a discount when political uncertainty becomes elevated. Even though another referendum could take years to be realised, it would serve to underpin Sterling somewhat until the eventual outcome.

Elsewhere, the European Parliament has approved the post-Brexit EU-UK trade deal. Tensions remain high between the two partners though as financial services and fishing have no guarantees from either side as yet. Finally, economists at EY ITEM Club and Goldman Sachs have predicted the UK could see its strongest GDP performance since the second world war. Both believe the UK will outperform all G7 countries this year and smash through the newly risen growth target from the IMF of 5.3%.

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