Brexit Bears:
The Pound continued to dive during Friday’s US session, with the Pound trading just shy of 0.89 pence per Euro. As leaders of both major political parties in the UK participated in televised debates, further light was elucidated upon the Brexit deal. Around midday, Sterling took a considerable dive through, momentarily dipping through 1.12 within GBPEUR and even breaking through 1.28 against the US Dollar. The dip coincided with news reports that Spain was dissatisfied with the incumbent Brexit deal, believing it to be against the domestic interests of Spain. Sterling traders have shaved value off of the Pound since the Brexit deal emerged alongside a flurry of cabinet resignations. Last week’s bearish Sterling tilt has been precipitated by concerns over May’s domestic political stability. However, with ratification of any deal within the European Council being drawn into question as well, the Pound continued to suffer. Within cable, the Pound fell by approximately 0.65% within a matter of minutes. The Rand weakened following a strong start this morning amidst a combination of Dollar strength and further fiscal concerns. Domestic fiscal pressures compiled as the IMF warned that South Africa’s next budget should include debt limit in order to shore up support for its underperforming domestic soft debt. Volatility throughout the global economy continues to remain elevated with the VIX holding onto a 20-handle.
Discussion and Analysis by Charles Porter
Opportunity for a weaker Dollar The passing of month-end allows markets an opportunity to reassess currency valuations. Despite a cooling off within the Dollar as forecasted following the agreement between the White House and Kevin McCarthy, month end flows yesterday showed favourable conditions for a short-term Dollar resurgence. The beginning of June coincided with headlines […]
Turkish Lira While President Erdogan removed the uncertainty overhanging the Turkish market by winning the election in the run off over the weekend, the news served to cement the certainty that nothing much was likely to change with respect to Turkish economic policy or indeed the subservient role of the Central Bank of Turkey to […]
Did EURUSD miss the news? Over the weekend, the President and the Speaker of the House of Representatives reached a much-awaited deal on the US debt ceiling. The impending constraint on debt could have forced the shutdown of government departments and precluded the US government from servicing costs and existing debts, triggering a default. The […]