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Brexit talks and GBP Sterling, US Dollar, Euro Currency

GBP
The media are starting to talk more and more about a Brexit. The current attention paid to the plight of asylum seekers both by the media themselves and by social media armchair warriors will add fuel to the fire stoked by the not inconsiderable 3.8 million people who voted for UKIP in the last general election. ING thinks that this could be the perfect storm that leads to a Brexit – a poll earlier in the year showed that just 23% of Britons have a ‘generally positive’ view of the EU – only Greece scores lower at 22%. Former Greek finance minister Varoufakis is coming to London to ‘debate’ left wing politics and the evils of austerity with Corbyn and a load of other lefties, so it’s hardly going to be a debate so much as a big self-congratulatory group hug. Credit Suisse, Morgan Stanley, Danske and Credit Agricole are all short GBPUSD, targeting 1.50 and below.

 
USD
The dollar didn’t perform particularly well as monetary policy expectations slipped just 10 days ahead of the next FOMC policy meeting which was once the subject of much speculation over it being the watershed for rate hikes. Chinese data continues to worsen, not helping global risk appetite, but US futures are holding up after yesterday’s Labor Day holiday, and the dollar is trading lower against the majority of its most actively traded counterparts. San Francisco Fed President John Williams said that recent economic data was “as good or better” than he had been expecting, but stopped short of calling for a rate hike this month, although in August he did say he felt it safer to start earlier and raise gradually.

 
EUR
The ECB said another 51.6b euros in securities were purchased in August, far lower than the 60+b euros in June and July, an indication of the reduced levels of liquidity over the summer. There a few pieces of data but none of it important so I haven’t bothered listing them in today’s report. Danske, UOB and Barclays are all short EURUSD, with Barclays still holding on to 1.04 as a target. In GBPEUR Credit Agricole are targeting 1.4285, and Credit Suisse 1.3369.

 

UK HEADLINES
Telegraph – China’s foreign exchange war chest drained as growth fears intensify.
Independent – Bonuses in FTSE100 bear no resemblance to performance.
FT – Employers fear impact of living wage.

 

UK Pound Sterling, US Dollar and EUR single currency commentary provided by Argentex