The sterling conundrum

10 January, 2017

Yesterday’s early weakness in sterling, on the back of the latest comments from PM May surrounding Brexit, took cable close to key support levels and the resilience seen through most of the post US election period has been unwound. You can see that better illustrated on EURGBP, where we have seen all of the move down to near the 0.83 level unwound as the cross has pushed above 0.87 to pre-election levels. The conundrum is between the uncertainties created by Brexit, against the fact that sterling has already weakened substantially over the past twelve months, making it look far more attractive from a valuation perspective, especially with cable trading near to levels last seen thirty or more years ago. In this context, it’s perhaps not surprising that we’ve see a divergence between 3M volatilities in cable and EURUSD, with expectations of future volatility in cable rising, the same measure for the euro falling. It’s hard to see calmer see for Cable, especially with this quarter seeing the anticipated triggering of Article 50 and possible parliament ratification of the Brexit decision, should the Supreme Court appeal not go the government’s way.

Overnight, we’ve seen mixed inflation data from China, with headline consumer prices falling to 2.1% (from 2.3%) on annualised measure, whilst PPI (largely commodity prices) rising further to 5.5% (from 3.3% previously). The data is indicative of more prices pressures to come, but for now the yuan has remained relatively stable after the increased volatility seen last week. Attention is turning towards Trump’s scheduled news conference tomorrow and the prospect of getting statements of more than 140 characters, this coming after Obama’s scheduled farewell speech today and the inauguration of Trump next week. As discussed yesterday, it’s pretty clear that we are seeing a stalling of dollar momentum, so the question is whether Trump can put further wind into the sails over the coming week. It could prove to be a hard task. Otherwise, the data calendar is on the light side today.


Source link  
Emerging markets rebound seems over

Asian markets have turned to a decline with a renewed force. After the rebound of last week, the index MSCI Asia ex Japan loses 1.2% and is only...

Rebound in Asian markets intensifies

On Friday morning, the demand for risks on the Asian bourses continues to recover. MSCI for Asia ex Japan is adding more than 1.2% this morning, having...

Reasons to rebound EM indices

Asian markets are adding after reaching 14-month lows the day before. Positive markets are supported by the reports about China's invitation to trade...


Strong data supports U.S. markets

Stocks of the Emerging Markets remain under pressure on Wednesday morning, with positive sentiments prevailing in American markets following...

Pound press dollar on news about Brexit

Michael Barnier, the EU's top negotiator on Brexit, called a reaching of the agreement on the deal within next 6-8 weeks realistic. This news supported...

Brent reversed from resistance level

Brent Crude Oil recently reversed down sharply from the major, multi-month resistance level 79.50 (which has reversed the price multiple times from the...


EM Markets sale-off spreading to DM

The current weakness on the developing countries financial markets is the longest since 2008. The similarities go further than that: as well as 10 years ago...

The price for trade uncertainty

The markets are cautiously on buy for American stocks, and the dollar adds on fears that trade conflicts are seriously stifling the business sentiment...

Chinese markets under pressure

The British pound maintains its position at 1.3020 on Thursday morning after rising by 1.2% from 1.2870 on Wednesday on the tone softening of the EU...


In the past 24 hours Bitcoin has gained 1.17% and reached $6350.16368978. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.7799% and is now at $1.1681. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 16.69% and is now at $211.177425219. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Daily Forex Market Reviews


Forex Currencies Forecasts


Top 10 Forex Brokers 2018

# Broker Review
1easyMarketseasyMarkets90%
2FXTMFXTM88%
3HYCMHYCM87%
4Alfa-ForexAlfa-Forex86%
5FxProFxPro85%
6FIBO GroupFIBO Group84%
7OctaFXOctaFX83%
8HotForexHotForex82%
9FXCMFXCM79%
10AvaTradeAvaTrade77%
  


Share: