The British pound continued its historic trend of starting the year on a weak note, marking the seventh consecutive year of losses on the first trading day after New Year's Day.
Deutsche Bank (ETR:) analysts noted that the pound fell over one percent today, adding to a long-term pattern where sterling has posted just three positive returns on its first day of trading of the past twenty years.
The bank's analysis suggested that the performance of the pound is not exceptional, as the Euro against the US dollar () has shown a similar pattern, albeit a little more clearly. The movements in the Cable, the term used for the currency pair, often coincide with repeating relative interest rates at the beginning of the year.
However, interest rate movements were modest today, despite a downward revision in the UK manufacturing PMI and more favorable unemployment claims data from the US
Deutsche Bank attributed further underperformance of the pound to the “beta of the technical breaks” from last year, referring to the fall of the Euro to lows last year and the decline of the pound to multi-month lows.
The technical analysis indicates that these breaks in key support levels have added to the downward pressure on sterling.
Looking ahead, Deutsche Bank did not find any strong pattern that would indicate whether the initial loss of the pound on the first day of trading would be reversed or continued in the following week.
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