Sterling losing steam?

Sterling has been going from strength to strength in 2014. However, analysts are starting to question if this bubble will burst, leaving the currency slightly deflated.

Carl Hasty, director of international payments specialist Smart Currency Business, said: “This could be particularly true against the US dollar, with the US economy beginning to emerge from a winter of low productivity.

“The recent report of a 1.3% fall in UK factory output in May – when a rise of 0.4% was expected – has also caused sterling to weaken.

“It is possible that sterling could bounce back, buoyed by other positive factors that affect the UK economy. However, businesses should be aware that while forecasting exchange rates can be useful for financial budgeting, they should still protect against risks in fluctuating currency markets.”