With Super Thursday upon us, considerable volatility lies ahead for Sterling, and for that matter global, currency markets. At midday today, the minutes from the meeting of the Bank of England’s monetary policy committee will be released. Only thirty minutes later, Dr Mark Carney, the Bank’s governor, will hold a press conference. Expectations for a 25 basis point interest rate hike peaked a couple of weeks ago, with markets pricing a 90% probability for a rate hike today. However, at the time of writing, the implied probability stands at little more than 15%. Still, considerable downside and upside remains within the Pound and will be released dependent upon the decision itself, and the committee’s approach to future monetary policy. The threat of consolidation of a populist coalition in Italy in weighing on the Euro moderately as it trades down by 0.03% on a trade weighted basis at the time of writing. The strong appreciation of the Dollar over the past two weeks, in addition to Trump’s decision on Iran’s nuclear arrangement, has weighed heavily on the Rand and emerging markets in general. The Rand has regained some strength this morning as the Dollar has sold off considerably.
Discussion and Analysis by Charles Porter