Where now for Sterling?

Happy New Year! Let’s hope for fewer financial hangovers this year. I left you in early December with my view that Sterling would fluctuate between 1.10 and 1.13 for the rest of the year, and that’s exactly what it did, ending up at 1.1291. That means that I was correct for all of December. Long may that continue, but somehow I doubt it.

Believe it or not, Sterling is now over 6% higher against the Euro than it was a year ago. Hard to believe, isn’t it? A year ago of course Sterling was at its all time low. It did improve to 1.20 during the year, but then came QE and that all changed.

So where to now? Sterling is still hampered by severe doubts over the economy and rising public debt. And yet there was enough interest in Sterling towards the end of December to help forge a solid recovery against the Euro.

I feel that we will need to wait until the election to get any true feeling for where Sterling is going next. Until then we will continue to bounce around in a broad range of 1.08 to 1.13. As we are at the top of that range now, I forecast that Sterling will struggle when markets open this week, and we will see a fall to around 1.1050 by next weekend.