Sterling in free fall against the Euro

Hi everyone,

 

£-€ rates sit at an 11-month low and is uncomfortably flirting with 1.09 levels. This has come after the government published advice on how companies should respond to a Brexit 'no-deal'. 

The document set out what will change if the UK leaves the EU without a deal on future trade ties and what measures the government is putting in place to cope. The inevitable decision to do this has rattled investors and caused more weakness in the £.

Secretary of State Dominac Raab remains confident though that 'a good deal is within our sights', after his meeting with chief EU negotiator Michel Barnier last week. Talks are set to continue this week and any news will move the market. The economic calendar watch belongs to the EU & US this week with key figures daily to look out for. 

There is a lot of noise from analysts suggesting that Sterling is significantly oversold at the moment and odds of a 'no-deal Brexit' are actually very low. This tells me if/when a recovery happens, it will be a sharp move up for this currency pair.

£-$ rates have recovered two cents since last weeks trading. It looks as if current levels have priced in two further rate hikes this year for the FED, but if these were to not materialise, rates will shoot up. Also political uncertainty has yet to hit the $ and depending on the outcome with President Trump and the respective convictions of his ex-lawyer and campaign manager. Political pressure could yet really hit the USD in 2018. 
 

 

 

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