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Pound Plummets as Scotland Gears up for IndyRef2

#News #AUD #CAD #EUR #GBP #NZD #USD
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Sterling


GBP/USD 1 Week Chart

The Pound (GBP) plummeted at the start of trading this week as The Times reported that the government is bracing for another Scottish Independence Referendum.

The report suggests that Prime Minister Theresa May will agree to the referendum, but only once the UK has left the EU. Scotland voted overwhelming to remain in the EU in last year’s Brexit vote and markets fear that the decision to leave could be the tipping point that will break up the UK.

Euro

The Pound Euro (EUR) exchange rate tumbled by nearly a cent today following the news Scotland may call for another referendum in March.

After a turbulent session last week, the single currency found some relief following the release of weekend polls for the French election that suggest that Independent candidate Emmanuel Macron has pulled slightly further ahead of far-right Marine Le Pen.

However, with the shock results of both Brexit and Trump fresh in their memories, investors are likely to remain dovish towards the Euro until after the elections.

US Dollar

Sterling softened around half a cent against the US Dollar (USD) this morning as Brexit threatens to tear apart the UK.

The ‘Greenback’ has also strengthened ahead of Donald Trump’s first major Presidential address in which he is expected to announce his phenomenal’ tax policy. These will be the first real details of the new administration’s economic plans and markets are optimistic that Trump will deliver a tax cuts that will help promote growth in the US.

However, should the announcement fall flat or not seem achievable to investors then the US Dollar is likely to weaken once again.

Canadian Dollar

The Pound Canadian Dollar (CAD) exchange rate remains subdued this week after an impressive jump in the Canadian inflation rate crippled the pairing at the end of last week.

Inflation jumped from 1.5% to 2.1% in January, easily outpacing a predicted rise to 1.6%.

Australian Dollar

GBP AUD fell over a cent during Asian trading this morning as markets reacted poorly to the suggestion that Scotland will once again attempt to break away from the UK.

The Australian Dollar was also bolstered by the recent uptick in commodity prices and investor apathy towards other majors, such as the US Dollar and Euro, leading to a sharp rise in market risk appetite.

New Zealand Dollar

It was a similar story for Sterling against the New Zealand Dollar (NZD) this morning as the ‘Kiwi’ also benefited from rising demand for high-yielding currencies.

NZD may rally even further in overnight trading as economists predict that the latest domestic Trade Balance figures will show a dramatic fall in New Zealand’s trade deficit.

 

Further Reading

 

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

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Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

New Year Optimism Retreats on US/Iran Tension

The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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