Sterling
Sterling received another pounding yesterday as the hysteria surrounding June’s EU referendum continued to escalate.
Sentiment towards the Pound worsened as Justice Secretary Michael Gove, one of the most prominent members of the ‘OUT’ camp, argued that David Cameron’s new EU deal was not legally binding and could be undone by the European Court of Justice. Downing Street rebutted the claim and while British stocks were barely moved by the spat, Sterling found itself sliding further downwards.
The Pound is currently sitting at a yearly low versus the Euro, a nine-month low versus the Australian and New Zealand Dollars, an eight-month low versus the Canadian Dollar and a seven-year low versus the US Dollar. Like a lemming marching towards a steep cliff, Sterling’s current path suggests that GBP/USD could hit rock-bottom rates not seen since Madonna launched her ‘Virgin Tour’ back in 1985.
Euro
The Pound to Euro exchange rate slumped to a 16-month low yesterday after depreciating by over half a cent.
International Monetary Fund (IMF) Chief Christine Lagarde told reporters that both the UK and Europe would stand to lose if Britons voted to leave the 29-nation bloc. Lagarde said that investment, job creation and business development was likely to cool in the period approaching the vote due to uncertainty, and suggested that things would continue to slide after a potential ‘Brexit’.
Both the Pound and the Euro have suffered in recent trading sessions due to uncertain economic times but it is the UK currency that has suffered the steepest losses.
US Dollar
The Pound found itself locked in a tunnel of fear yesterday as investors drove ‘Cable’ lower by another cent to a fresh seven-year low.
Jittery traders saw Sterling slip through the grips of a significant psychological support level and, instead of using this as an opportunity to lock in profit, continued plugging away at the embattled UK currency. GBP/USD is now just four cents away from hitting an historical 30-year low of 1.35, not seen since the days of Thatcher’s premiership. I’m
Investors have driven ‘Cable’ lower by around seven cents since the start of February and the fear of further falls means that very few people are willing to bet against the downward curve at this moment in time.
US data actually printed pretty horrendously yesterday, with service sector output sinking to 49.8, compared to calls for 53.5. However, the print was almost completely ignored by ‘Brexit’ fearful traders of the Pound to US Dollar exchange rate.
Canadian Dollar
Sterling shed over two cents against the Canadian Dollar yesterday as a market-wide wave of negative sentiment crashed into Sterling and weakened its flood defenses. The levee has not yet burst, GBP/CAD currently stands at an eight-month low but technical trading levels suggest that the Pound could weaken, rapidly, by another ten cents if investors keep applying pressure.
Australian Dollar
The Pound to Australian Dollar exchange rate softened by just under a cent yesterday to strike a new nine-month low as ‘Brexit’ headlines haunted the dreams of those invested in the UK currency. The impending Sterling crisis appears to be becoming a self-fulfilling prophecy: as the anxious headlines grow, the Pound shrinks and confidence continues to collapse.
Australian wage growth slowed to its weakest level on record, 2.2%, but the Antipodean currency did not falter.
New Zealand Dollar
The Pound plunged to a fresh nine-month low against the New Zealand Dollar yesterday after suffering another two cent depreciation. GBP/NZD is now -15 cents weaker than halfway through January.
Data Released
09:30 GBP Gross Domestic Product (QoQ) (4Q P) Medium 0.5%
10:00 EUR Euro-Zone Consumer Price Index (YoY) (JAN F) Medium 0.4%
13:30 USD Durable Goods Orders (JAN P) High 2.5%