Long Brexit road ahead for sterling

22 February, 2016

There is no doubt about the standout currency this morning, with sterling having gone up the escalators into Friday’s close and down the lift-shaft as the start of the Asia session. Friday’s up-move came on the back of the late evening deal between the UK and the EU on the UK’s revised relationship with the EU. But with yesterday showing the influential London Mayor (and perceived successor to UK PM Cameron) coming out in favour of the UK leaving, then sterling took a more bearish view. Between now and 23 June, we will have 191 days during which the issue is never far from the headlines. For sterling, as I’ve said before (see “Will Brexit Break Sterling?”), this won’t be a fun time and it’s more the uncertainty that will weigh on the currency, rather than investors taking a view on the outcome and the implications for the economy, which are hard to argue either way.

Despite sterling’s move lower (from 1.44 to 1.42 on cable), the dollar is still mixed in Asia. EURUSD has retraced below the 1.11 level, but the Aussie is pushing towards the 0.72 level, again showing its resilience to global developments. For this week, we have preliminary PMI data in the Eurozone released this morning, with some mixed readings being seen for France and Germany. Stocks at least are opening firmer and with no major central bank meetings this week, we are likely to see market sentiment in FX driven by equities and commodities.


Source link  
Fed Holds Rates for Now But...

Unsurprisingly, the Federal Reserve kept rates on hold following the end of its 2-day meeting on Wednesday. They did, however, indicate that...

UK Unemployment at 42 Year Low

UK unemployment fell to its lowest level since 1975, data on Wednesday revealed. Unemployment fell by 75K, bringing the unemployment...

US Equities at Record Levels

US equities closed at record levels on Wednesday, as improved risk-on sentiment returned to the markets and news that the US economy...


USD Stabilizes

Hurricane Irma has, reportedly, inflicted less damage on the US mainland than was originally predicted, thereby reducing the economic impact of the devastation it was expected to...

Markets on Edge

With the markets risk appetite dampened after North Korea’s most powerful nuclear test to date, USD and Global equities fell whilst Gold, Yen and Sovereign Bonds all rose....

Risk Appetite Returns

North Korea official news agency reported on Monday that leader Kim Jong Un will watch the actions of the United States for a while longer before making a decision to fire missiles at Guam...


US-Korean Tensions Rattle Markets

Markets were cautious on Wednesday, as safe-haven assets pushed higher after tensions grew between the US and North Korea. Markets are concerned...

Global Manufacturing Grows

Recent data releases have shown that global manufacturing saw an increase in July, further confirming global economic momentum has carried into H2...

All Eyes on Central Banks

Markets were, for the most part, little changed on Wednesday as traders waited for today’s Bank of Japan and ECB rate decisions. Earlier today...

  


Share: