Pound may be headed for parity

28 September, 2018

The market had been expecting such a move so all eyes were on the following monetary statement for signs of the US central bank’s future moves and US Fed president Jeremy Powell pulled no punches with a bullish speech that left no doubt in investors’ minds that further rate hikes were on the way.

This is just another notch in the realm of bad news for the pound after last week’s disastrous performance by British Prime Minister Theresa May in Salzburg where she tried to lay out her future Brexit plan before EU partners, but was immediately rebuffed.

So with the difference in interest rates between the UK and the US growing wider as well as increased chances for a hard Brexit, some predict a dire situation for the pound as the year closes out.

"After a few weeks of relief, GBP fell sharply following the EU summit in Salzburg, and comments from PM May that dug in on the UK’s negotiating position” said analysts from Goldman Sachs.

“The summit offered no progress on the Irish border nor the end-state terms and although expectations for any decisive action were low, the tense atmosphere has shaken the improving sentiment in pound” they added.

One analyst believes if no deal is struck on Brexit, the pound is headed for its lowest level against the greenback for many years as well as parity against the Euro.

"Sterling continues to work as the shock-absorber. The spectre of material short-term damage to the economy in case of a "no deal" keeps Pound investors on their toes," says Daniel Trum, a strategist from UBS

"If a no-deal scenario were to transpire, it is likely that the hit to the economy will be substantial until factors can adjust. We think that GBPUSD could experience new multi-decade lows in the area 1.10-1.15, while EUR/GBP may temporarily shoot above parity”. He added.


Source link  
Gold's next target is $1600

The gold price has taken a breather over the last few days after rallying more than $100 dollars in the space of 2 weeks and some...

Gold rally not over

The gold price remains firmly above the US $1500 dollar mark in today's trading session as traders seek out the precious metal as a safe haven on the back of political...

Gold poised to hit $1500

Gold continues to surge in today's trading session, following on from last weeks solid gains as investors seek out safe havens against the...


Aussie dollar up on Chinese data

The Australian dollar remains firmly above the US70c mark in today’s trading session after a strong round of data out of China alleviated...

Pound may hit $1.37 by years end

The British pound is expected to face increased volatility over the coming months as the deadline approaches for the UK to leave the EU at the end...

Has the US dollar peaked?

The US dollar has made significant gains against all the major currencies over the last month as worries over trade tensions between...


Pound may suffer in the long term

The British pound continues to power ahead in today's trading session after yesterday's developments in the British parliament that many see as ending...

Gold needs to remain above $1300

The gold price has staged a substantial rally since last week after the US Federal Reserve latest board meeting where they stated that any move...

Only way for oil is down

The oil price has now broken down through the all important $50 mark, which is a physiological blow to any chance of a rally, and according to...

  


Share it on:   or