The Pound is back moving on political headlines following May's pro EU talk
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by Abi Moses on 26th October, 2016
While we have been speaking at large on how the Pound has been moving on fundamentals of late, it appears we may have been wrong, with political headlines seeming to be affecting the fluctuation in Sterling. Yesterday, we saw a steep sell off, resulting in a severe dip to 1.2080.
May is arguably at the centre of this shift, with a secret recording of one of her conversations unveiled. Discussing her desire for the UK to remain in the single market she was concerned at the prospect of businesses leaving the EU, sounding decidedly pro-Remain. Within the talk to Goldman Sachs her comments are at odds with her recent ones, giving traders another strand of uncertainty to work with.
City Index, one of our partners here at Spread Betting, believes that the pound is heavily reliant on the private PM, believing the pound will react to May's opinions. While the selling pressure is arguably over for the Pound, the more focus on private views of Theresa May the more likely this is to soothe the battered state of Sterling.
Another looming uncertainty is whether or not Mark Joseph Carney will step down as Governor of the Bank of England. Just yesterday the economist prevailed uncertainty over whether he would resign his position in 2018, rather than stay on until 2021.
City Index, reporting on the Pound, yesterday wrote words of optimism about this potential resignation:
'On a brighter note, he said it was too early to predict the future of the UK’s relationship with the EU at this stage, and the markets, which are prone to drama at the best of times, could be too gloomy about the post EU prospects for the UK economy. He also appeared to rule out further near term rate cuts, this has helped UK Gilt yields to recover and the 10-year yield is now above 1.10%, which is supporting the pound recovery for now.'
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