The CurrencyShares British Pound Sterling Trust (NYSEArca: FXB) is up 5.4% year-to-date, making it one of the better-performing exchange traded funds tracking a major developed market currency, but FXB could be tested this week.
“The pound may be in for a bout of volatility, according to analysts at ING Groep NV, after a week that saw the currency confined to its tightest range versus the dollar in almost three year,” reports Bloomberg. “Sterling slipped to its lowest level in six weeks against the dollar on Aug. 10 as data signaled sluggish U.K. growth, prompting money markets to push back bets on the timing of a Bank of England interest-rate hike. Morgan Stanley revised its forecasts to predict parity in euro-sterling, which would be a record.”
Like other major currencies, the pound is besting the slumping dollar this year. The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), the tracking exchange traded fund for the U.S. Dollar Index, is one of the worst-performing currency exchange traded funds this year. UUP is lower by almost 9% year-to-date.