Following yesterday’s chronic bout of Sterling weakness, the Pound has opened weaker for the second consecutive day this week. Yesterday evening saw the heads of state of Commonwealth nations gather together at an event in London hosted by the UK Prime Minster Theresa May. As the market opens this morning, investors appear uncertain whether the UK made headway in under the table trade negotiations last night. According to the draft transitional agreement, the UK may negotiate its own trade negotiations, although not implement them, during its transitional phase. With Brexit day less than a year away, any informal news about last night’s meeting could prove positive for the Pound.
Globally, two interesting notes appear from emerging markets: South Africa and Turkey. In South Africa yesterday morning, March’s reading of Consumer Price inflation was published. The publication showed that annualised consumer price inflation for March was just 3.8%, exaggerating its decline further. Following an interest rate cut by 25 basis points at the central bank’s last meeting, low CPI inflation is not what was prescribed for South Africa’s economy. Whilst the Rand held relatively strong during yesterday’s trading session, the statistics do create cause for concern about the future path of monetary policy.
In Turkey yesterday, the declaration by President Erdogan of a snap election rallied the Lira. The move by Erdogan represented an opportunistic attempt to consolidate power while domestic growth and political satisfaction is acceptable. The Lira gained 2.5% against the Dollar, rallying to a rate of just shy of 4 Lira to the Dollar.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Daily Newsletter
Related Insights
Morning Brief – European Interest Rates
Humphrey Percy
Wed 6 Dec 2023
European Interest Rates More momentum on rate cuts in the Eurozone as expectations grew for cuts starting in March and totalling 140bps in 2024. Equally in the UK cuts of 130bps starting in June are being pencilled in to market calendars. What this means is that GBP/EUR is looking more than especially good value at […]
Morning Brief – I’m a central banker, get me out of here
Charles Porter
Tue 5 Dec 2023
I’m a central banker, get me out of here Ant and Dec were not present at the RBA decision overnight. However, based upon the reception of the decision, Governor Michele Bullock might rightly feel she was in one of the duo’s trials. Markets offered a frosty reception to the Reserve Bank of Australia’s latest interest […]
Morning Brief – UK
Humphrey Percy
Mon 4 Dec 2023
UK With 2 year mortgage rates less than 4% and 5 years at 4.39%, the implication for the housing market which has responded by a modest 0.2% rise, is that rates are soon going to fall and that the UK economy is stabilising. While there will doubtless be setbacks to this rose tinted scenario, for […]
