Gold boosted as analysts lower sterling expectations
Samuel Gee, News Editor
11 Oct 2016, 2:51 p.m.
Gold has jumped 1.27% (£+12.82/ oz t) since the weekend, boosted by the prolonged decline of the pound. With sterling suffering four consecutive days of losses on the back of last week’s late-night flash crash, analysts have promptly cut their forecasts for the currency in the coming months.
The failure of U.K. politicians to promote any confidence in their ability to negotiate a favourable Brexit deal has extended the decline of the pound and the continued political uncertainty surrounding Britain has led analysts to believe that the currency could fall even further in the future. Despite already being abnormally low since June’s Brexit referendum, the pound is still being backed to fall even further as the reality of the situation unfolds. Sterling already met its lowest position since 1985 on Friday and ING have cut their forecasts for the pound from $1.25 to $1.22 by the end of the year.
Sterling has been outperformed by 16 other major currencies in 2016, falling 17% against the dollar in a dreadful year for the currency. While some have claimed that a cheaper pound could be a positive, boosting exports from the UK, the rising demand for gold in recent months demonstrates a faltering confidence in the strength of the pound.