UK Winning Ahead Of Referendum
18 September, 2014
Wednesday’s trade saw plenty of ecostats for the UK ahead of the Scottish referendum on independence today.
First we had the Bank of England minutes from this months MPC policy meeting. They showed that 2 members were still voting for a rate hike, as seen last month where they voted for a rise to 75 basis points. There was again unanimous votes to hold asset purchase at present levels so all in all, not much of a surprise ad we still don’t expect any rate rises here until next year as confirmed last week by Mark Carney the BoE chief.
We also saw UK unemployment data released, which came out better than forecasters predicted. The unemployment rate was 6.2 percent rather than the 6.3 percent predicted, whilst the number claiming job seekers allowance was over 7000 less than analysts expected, so overall a very positive set of figures.
With the referendum taking over recently, positive ecostats have had little baring on the pounds performance, but today proved different. Sterling made gains of over half a cent against the euro, a cent over the US dollar and 2 cents over the Aussie and Kiwi dollars. EU inflation came out as expected so had little impact to help the euro, whilst US inflation came in well under forecasts so again traders seemingly had little choice but to back the pound.
This of course could well be the calm before the storm as today is the day we’ve been waiting for. The Scots get to vote on whether they gain independence from the United Kingdom and if the vote goes the way of the Yes voters, its going to be tough times ahead for sterling. It unlikely we will have any real indicators to the result until the evening so it could be a rocky road for the pound. If you have a currency transfer to make in the near term it maybe prudent to contact one of the traders first thing today to book just in case the vote goes the wrong way to what the majority of Brits want and the pound plummets! Its anyone’s guess right now so is it worth the risk? Take advantage of the gains yesterday and get in early.
In addition to the vote, we also have UK retail sales this morning, US housing starts and jobless claims this afternoon followed by a speech by Fed chairwomen Janet Yellen. Happy Thursday all, tomorrow could be a day for the history books.
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