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February 2016

Daily Currency Insight

Published: Monday 22 February 2016

  • GBP drops on Boris's announcement
  • Sterling volatility assured as Referendum date announced
Boris Johnson is definitely familiar with controversy and his announcement that he will support the 'out' campaign over EU membership is another exciting page in the 'BoJo' memoires. As June 23rd looms, the fate of the Pound is in the hands of the campaigners on both sides. I think I can safely say that Sterling will be all over the shop. If ever there was a time to use automated orders, which can trigger in an instant to secure your preferred rate, this is it.
 
As things stand, the Pound has reacted badly to the news, shedding 1 to 1.5% across the board and breaking out of a number of long term trading ranges. It is too early to say whether this is a knee-jerk reaction or the start of a longer term weakening pattern but it does present a great opportunity for those who need to buy Pounds and sell...well anything really. It is unlikely Mark Carney will strengthen the Pound tomorrow when he speaks to the Treasury Committee but Sterling may get some support when we get the 2nd estimate of GDP growth for Q4 on Wednesday. These are the only major news stories for this week as far as Sterling is concerned, so we may see further weakness.
 
We do get a barrage of EU data this week including manufacturing data this morning, German business confidence tomorrow, Eurozone inflation data on Thursday and a number of speakers from the ECB throughout the week. Clearly, the UK referendum debate is going to be a more substantial driver of the GBP-EUR exchange rate through the week and perhaps months ahead but Europe's glacially paced recovery is still an issue.
 
For the US, this week is a tad quiet. In amongst the housing and consumer confidence data, we will get a slew of speeches from the Federal Reserve and that all leads up to the 2nd estimate of GDP growth, due on Friday. Many see there being a small downgrade to the growth data and that would weaken the USD. If you are a USD buyer and you have an aversion to risk, you may wish to get something booked earlier in the week. Contact your Halo Financial Consultant for more information.
 
And I have fantastic news. Scientists have discovered that the 'habitual' consumption of dark chocolate helps with cardiovascular health and libido. So for centuries men have been buying women chocolates as a gift but never knew quite why. The truth is that they were sub-consciously trying to improve their partners' heart function, bless 'em. Oh and there is the libido thing as well but I am sure that is a coincidence. Oh and too much chocolate will probably make you fat and give you diabetes eventually but.... ya'know ...details details.
 

Quote

 

Money is only useful when you get rid of it. It is like the odd card in 'Old Maid'; the player who is finally left with it has lost. - Evelyn Waugh

 
FX Research by David Johnson

Daily Currency Analysis with Michael Condron

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