Hawkish central bankers create market chaos

Hi everyone,


We promised fireworks in the market this week with the upcoming data due out and we was not disappointed. The only disappointment would come from Sterling sellers who decided to 'stick' instead of 'twist', as GBP has fallen close to 2% across the board. This means, anyone looking to purchase £-€100,000 would have to pay an extra £1500 compared to where rates were trading at on Wednesday. 


Days/weeks like this is where we come into our own and highlight why it's crucial to use our expertise on this unforgiving market. The chances were slightly in favour of £ moving higher this week, but not by much. Too many significant variables were also at play and with the Pound expected to go far lower than it could climb up (overall positive result v overall negative result), our call was to hedge at least 50% of customer money before the key events took place. 


£-€ rates are trading at a 1-month low with the £-$ a 2-week low (with more expected to come). As usual, after days with huge market swings, the dust must settle before we can understand what could happen next. Sterling hasn't been helped this morning after UK retail sales and manufacturing PMI data both missed estimates. On top of this, overall EU readings this morning were positive, sinking GBP further. 


We will go into detail on why the Pound has fallen in our Monday market report, but all three central banks have played their part. Essentially, the result of interest rates and the meetings thereafter have caused huge concerns over an incoming deep global recession. This has naturally spooked traders who have moved away from the 'riskier' stocks and as £ is a 'high-beta' currency, it has consequently meant weakness in the Pound. 

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