Baby Steps:
Brexit sentiment is waning this morning despite highly positive sentiment over the Brexit swarming markets on Friday. Italian risk continues to weigh upon markets, supporting GBPEUR around 1.1380; back below 0.880 in the more popularly traded EURGBP. This leaves the Pound bragging three-month highs over the Euro. The Dollar continues to dominate Spot markets with the greenback trading one quarter of one percent higher than its market opening price, falling comfortably below a weak resistance level at 1.15. Friday afternoon saw even the frequently cold (particularly when sober), Jean-Claude Juncker, even bring himself to admit that a Brexit deal in November now looks wholly possible, even probable. Backing up this sentiment was a plethora of informal reports that the EU was ready to offer the UK a supercharged deal; a Canada-style deal on steroids. With Italy’s Prime Minister setting his sights on Commission President Juncker the French Minister of the Economy Pierre Moscovici, the troubled sovereign state’s own implosion sent waves through the single currency. The Chinese Yuan has devalued to trade close to 7 Renminbi to the Dollar, with banking reserves slashed in a move to boost economic growth. The flooding of markets with excess supply of onshore Renminbi, the devaluation of the currency has important implication for the future of a trade war and thus the US Dollar.
Since Market Open:
- GBP: Brexit sentiment is more tumultuous than the British weather. Friday’s heatwave has been met by Monday morning drizzle as the Pound looses close to 0.2% on the day.
- EUR: Juncker is ruining Europe! Claims Italian Prime Minister Giuseppe Conte. I won’t mention the last person who was accused of doing such a thing… But the threat is highlighting Italy’s contempt for Europe.
- USD: The rally that won’t abate: The US Dollar continues to rally as the Renminbi falls increasing the concomitant efficacy of a trade war.
- EM: The Rand trades flat on the day despite a surging US Dollar.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Morning Brief – Why GBPEUR may still move lower
Charles Porter
Tue 17 Jan 2023
Why GBPEUR may still move lower Despite a significant leg downwards in late 2022, it seems plausible, indeed likely, that GBPEUR may have further to fall. Late last year and in early 2023, GBPEUR has stabilised with its fall from the teens proving sufficient to redress the changing fundamentals and flows across the currency pair. […]
Morning Brief – Short covering
Charles Porter
Thu 17 Nov 2022
Short covering Evidence from the CME provides an interesting qualification to the CFTC positioning data that GBP investors have been watching closely. For many years now, markets have held a net short position on GBP, fluctuating from more neutral grounds through to a heavy focus upon achieving selling conviction behind the Pound at times. […]
Morning Brief – The Hunt is on: UK Budget and the Global Population
Charles Porter
Tue 15 Nov 2022
The Hunt is on: UK Budget and the Global Population The Autumn budget is drawing closer with Jeremy Hunt, Chancellor of the Exchequer within Rishi Sunak’s government, due to announce the measures to the House of Commons on Thursday. Sterling had a rocky start to the week yesterday with major crosses falling as the […]
