The Pound Sterling has enjoyed and Archimedes-esque Eureka moment. Hopefully, it won’t be caught short running nude through the street to brag to its head of state anytime soon… For the first time in a good while (if not ever) it has been the words of Jeremy Corbyn that kick started the rise in value within the domestic currency. Corbyn, around 11:25, proclaimed to an audience of Labour Party activists in Hastings that a second referendum “was on the table”. Alongside confirmation from Downing Street this morning that the Prime Minister will allow informal votes to gauge confidence on her Plan B(s) on Monday, the rhetoric from Corbyn suggested that Brexit Referendum II could gather a majority. Accordingly, markets raced to reward the Pound with an additional 25 basis points of value – as seen within GBPEUR below.
HSBC publicly announced that they are shifting their stance towards Sterling to bullish, willing to hold long positions on the Pound. Analysts at HSBC have suggested that should a second referendum occur and should the public vote to abandon Brexit, the Pound could rally by as much as 20%. The forecasts certainly seem optimistic, however, these perceptions do contribute towards understanding an appetite for British assets at different outcomes of the Brexit impasse.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
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 […]