A Brexit 'no-deal' looking likely
|Under normal circumstances, a rate hike is seen as a positive move in the FX market. However, with the cloud of uncertainty hanging over UK politics just now, we have seen no (well needed) respite. Sterling was initially boosted by the unanimous vote to raise rates, but comments made after by Governor Carney saw the gain quickly collapse.
Carney warned that chances of a 'no-deal' were "uncomfortably high" and urged policymakers to "do all things to avoid it". This was followed by Trade Secretary, Liam Fox, mentioning there was now a '60-40' chance of the UK crashing out of the EU without an agreement in place. Bad for £.
Brexit news will again dominate the market this week/month and data-wise it is a very quiet week until Friday, where we will learn how much the UK economy has grown both QoQ & YoY. Any trades required this week should be looked at before this event unfolds.
Whilst interest rates currently stand at a 10-year high, Sterling is now at an 11-month low versus the $ and at a stale 1.12 against the €. A bleak outlook awaits sterling for the rest of the month.