- Sterling offered as a shared currency - EXCLUSIVE
According to a very well-placed source, Halo Financial can exclusively reveal that Chancellor of the Exchequer, George Osborne, is said to be in conversation with the Eurozone member states and others within Europe over plans to offer the Pound as a shared currency if the UK votes to leave the EU.
It is well known that Britain has staunchly resisted joining the Euro; the European shared currency and that, in the wake of the 2007 crash and the fall out it produced across Europe, that decision to stay out of the Euro and retain the Pound has been generally accepted as being a very positive factor; allowing the UK to benefit from a weakened Pound and to boost its exports. These factors have given the UK a boost; as evidenced by the 1.9% economic growth rate at a time when the EU is barely growing at all.
Fears have been expressed in many quarters that a British exit (Brexit) from the EU would trigger further Sterling weakness and, in a move seen as an attempt to capitalise on that potential, the Chancellor has offered other EU members the chance to adopt Sterling as their base currency so that they too can take advantage of the export boost a weak currency offers whilst aligning with the credibility that the strength of the UK economy offers.
Which EU states might consider the offer is a closely guarded secret but one official from a group known as the Joint Organisation of Kindred Europeans (J.O.K.E.), Dr Gerter B Kiddink, is quoted as saying, "All EU members must be concerned about what they will do without Britain's £8.5 billion contribution per year and this may be a way for them to take advantage of the UK exit." He went on to say, "I think Angela would be quite interested in the idea."
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Other Market news
In spite of the improved UK GDP growth data, the Pound was not able to make any headway on Thursday. The last day of the month and the quarter would normally be an opportunity for traders to take profit on their positions and, as the Pound has weakened throughout March, it would be a normal occurrence to see it bounce on the last day. That didn't happen though. Further nervousness about the potential Exit from the EU and a surprise rise in Britain's current account deficit resulted in the Pound trickling lower. The lack of UK data on Friday is likely to mean the Pound will meander in a narrow range against most other currencies.
In fact, the only exciting data due on Friday is the US employment and wages report and that isn’t as exciting as it used to be. There was a time when the non-farm payroll count was the month's highlight and all pub lunches on the 1st
Friday of the month were banned in dealing rooms but those days are long gone. The activity of the Federal Reserve, the state of the commodity markets and the Chinese slowdown are probably more influential with regard to the USD these days than the machinations of the US labor (sic) market. That is unless the actual data is massively different to the forecasts. That isn't expected this Friday though, so a little USD weakness is the most likely order of the day.
And then it is the weekend. Have a great one and rest up. Next week will be the first five day week in the last 3. I don't know how we'll cope.
Today's Major Economic Releases
FX Research by David Johnson
||UK: Manufacturing PMI, index
||E19: Unemployment rate, %
||US: Nonfarm payrolls, chg, k
||US: Private payrolls, chg, k
||US: Employment rate, %
||US: Average hourly earnings, % m/m (y/y)
||US: ISM manufacturing index
Daily Currency Analysis with Joe De Berniere