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UK Pound Chaotic Against the US Dollar

By:
Peter Taberner
Published: Apr 18, 2016, 12:08 UTC

The GBP/USD rate has started the week in turbulent fashion, as the UK pound is currently buying $1.419, having reached a nadir this morning GMT of below

UK Pound Chaotic Against the US Dollar

The GBP/USD rate has started the week in turbulent fashion, as the UK pound is currently buying $1.419, having reached a nadir this morning GMT of below $1.1414..

The same trends can be found in the EUR/GBP rate, where the pound fell to its lowest point against the euro, spiralling down to buying 1.252 euros, before escalating upwards to 1.256 euros.

Fears over the outcome of the referendum to leave the European Union (EU) continues to be a ball and chain around the value of the pound.

An exclusive latest survey conducted by ComRes has shown that there are more voters who are undecided on whether to leave the EU or not.

Compared to a previous poll, the amount who don’t know if they should leave or remain in the EU has climbed up to 17% from 6%.

UK Chancellor Alerts UK Voters Over ‘Brexit’

Today the UK Chancellor George Osborne has warned UK voters that they will be “permanently poorer”, if they choose to leave the bloc.

An analysis at the UK Treasury Department has concluded that the UK economy will be 6% smaller by the year 2030.

This would be the equivalent of every household in the UK losing £4,300, although this claim has been criticised by those who want to leave the EU.

The 200 page report, looks at three scenarios in the event of a ‘no’ vote which would lead to an EU exit.

Then first situation would be that the UK joins European Economic Area, in a similar vein to the EU’s agreement with Norway.

Secondly, the UK would agree a bilateral trade deal, imitating the arrangement that the EU currently has with Canada, although the negotiations for that trade agreement lasted seven years.

The final outcome that the treasury has highlighted, is that the UK has a trade relationship under World Trade Organisation rules, this relationship has previously been agreed with countries such as Russia and Brazil.

Euro Climbs on Dollar

The EUR/USD rate has fallen in favour of the euro this morning CET, with the euro climbing to buying $1.13, having started the day just below $1.129.

In their daily report, LMAX Exchange said that Euro setbacks had been supported into the end of last week on softer US industrial production and Michigan confidence, which is now at a seven month low.

Also, the market has found additional bids into Monday, due a fresh wave of risk off trade in reaction to the Doha, where the opec talks collapsed, which has lead to oil prices falling

Brent crude fell 7% at one point, but the prices recovered to falling by  4.3%, at $41.23 a barrel.

LMAX Exchange analysts also pointed to dovish comments from James Bullard, the St Louis president of then Federal Reserve, as he opined that there should be caution over rate hikes, as growth is likely to be weak.

Mixed Data Released From the United States

There was a strong uplift in business activity in New York manufacturers report, where the survey increased by 9.6 points in April, and is now at its highest level for a year.

Although due to stagnant wage growth, the University of Michigan consumer sentiment index has fallen to 89.7.

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