The CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), which tracks the British pound’s movement against the U.S. dollar, is easily one of this year’s worst-performing currency exchange traded funds and that situation is getting worse, not better, as sterling labors near its lowest levels in more than three decades.
However, the situation is not so bad for U.K. stocks and ETFs such as the iShares MSCI United Kingdom ETF (NYSEArca: EWU), the largest US-listed U.K. ETF. In fact, the U.K.’s benchmark FTSE 100 recently hit an all-time high and EWU is higher by nearly 7% over the past 90 days.
SEE MORE: Currency-Hedged U.K. ETFs for Improving Earnings, Depreciating Pound
Last month, the Bank of England pared its benchmark rates to a record low 0.25% from 0.5% and anticipates it will further bring it down toward zero ahead, the Wall Street Journal reports. The BOE also revived its government bond-buying program, which has been on pause since 2012, along with purchasing corporate bonds as well.
Given the weaker sterling but resilient global growth outlook, Citi agrues that U.K. earnings per share growth estimates will be positive by 2017, the first time it has moved into the black in five years.