Pound Down on Weaker than EU Outlook

The pound started the week down versus the euro and the U.S. dollar as sentiment towards other wealthy nations in the world remain more positive than the U.K.’s economic perspectives, forcing investors to abandon pound priced assets to inject capital in more attractive currencies backed by fast recovering nations.

After a Moody’s report featuring world’s wealthiest nations in which the U.K. was rated as “resilient” against better rating of its European neighbors, France and Germany, considered “resistant”, the pound tumbled further versus the euro, and also went down versus the greenback as the interest rate outlook in the U.S. changed, with speculations suggesting hikes for the mid-term future, forming a winning pattern on the dollar charts versus most of the 16 main traded currencies. Despite the U.K.’s evidences of economic recovery, the process has been slower than the resilience perceived overseas, in emergent countries and commodity exporter nations like Canada or Australia, whose currencies have been gaining consistently versus the pound in 2009.

The outlook for the pound remains negative as investors opt for higher-yielding options in risk fueled sessions, and prefer to take safer bets in moments of strong risk aversion, leaving almost no appeal for pound-priced assets, which are likely to remain less attractive than average at least until the end of the year.

GBP/USD traded at 1.6335 as of 10:15 GMT from a previous rate of 1.6470 in the intraday. EUR/GBP traded at 0.9092 from a previous rate of 0.9042.

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