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  
Is the gold price being manipulated?26 May, 2020  

The lack of volatility or growth in the gold price recently has left many in the market scratching their heads as to why the precious metal has't rallied considering...

Global oil demand has yet to peak, says IEA head26 May, 2020  

During the press conference, the head of the International Energy Agency (IEA) gave a very encouraging comment on the recovery of the oil market...

US shale may halt oil rally19 May, 2020  

The oil price has hit some resistance in today's trading session, taking a pause from its remarkable recovery as major cutbacks from the world's leading oil producers...


Oil: Saudi Arabia sharply reduced exports15 May, 2020  

Saudi Arabia continues to push global oil prices upward, cutting production and exports to a minimum of almost 20 years. Saudi Aramco announced...

The Fed will use the tools fully14 May, 2020  

Fed Chairman Jerome Powell spoke for the Peterson Institute today, saying he was ready to use all the monetary policy tools to the full extent, which put moderate...

3 weeks left before the collapse of the oil market29 Apr, 2020  

The global oil market is racing at full speed to a logistical collapse. A reverse report has been launched for mining and trading in "black gold" companies, which quickly...


Ending coronavirus lockdown will not stop gold28 Apr, 2020  

The gold price is down in today's trading session as the number of coronavirus cases begins to fall worldwide which is leading to speculation that some countries...

Pending interest rate cuts28 Apr, 2020  

In most countries, they continue to discuss steps to phase out quarantine, while at the same time talking about the difficulties for the rapid recovery of the global economy...

PMI Indexes: April is the second month of a disaster24 Apr, 2020  

April PMI preliminary indexes released yesterday paint a picture of total disaster. Life in the services sector in all major economies (preliminary PMIs...