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, a scenario that is showing few signs of near-term improvement.
FXB has traded slightly higher over the past week, but not enough to really eat into a year-to-date loss of more than 17%. Currency markets were already on edge with the British government setting a timeline for a break from the European Union in what some see as a potential “hard Brexit.”
SEE MORE: Pound ETF Retreats as Sterling Slips Toward 31-Year Low
Looking ahead, many expect the Bank of England to enact more accommodative measures to help bolster the economy. In the post-Brexit environment, Martin Weale, one of the Bank of England’s long-time hawks, is even beginning to turn dovish on their policy outlook. In August, 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.
[related_stories]The British Pound had a brief rebound earlier this week after a UK government lawyer indicated that Parliament would very likely have a vote on the final terms to leave the European Union. However, this optimism was countered by news of rapidly increasing inflation. Consumer price growth in the UK reached 1% in September, almost double the 0.6% for August,” notes Options Express.
Following Brexit, the Bank of England added a new term-funding program for banks, providing lenders ultra-cheap, four-year loans to help finance lending for households and businesses as an additional step to stimulate the economy.
SEE MORE: Currency-Hedged U.K. ETFs for Improving Earnings, Depreciating Pound
Examining the pound’s charts does not turn up much good news on a technical basis.
Turning to the three month continuation chart, the patterns are all bearish for the Pound. Ever since the result of the EU referendum was announced, the trading pattern has shown a series of lower highs and lower lows. Not only is the Pound trading well below the 20 day simple moving average,” adds Options Express.
For more information on Brexit, visit our Brexit category.
CurrencyShares British Pound Sterling Trust (NYSEArca: FXB)
