Sterling slips and slides
Sterling lost further ground amidst Brexit uncertainty ahead of Theresa May’s key note speech today. In the meantime, the PMI manufacturing registered a third-consecutive monthly decline in February, pushing lower to 55.2 from 55.3 in January, and dropping to an 8-month low. That said, the index remains well above the 50 level, which marks the contraction and expansion line.
Pound Sterling – UK Markets
The Pound fell against the Euro dramatically, exchanging at €1.18. Sterling is steady against the US Dollar, with the exchange rate at $1.37.
PM Theresa May’s speech on the UK’s relationship with the EU after Brexit was the focus for today. She gave her speech earlier this afternoon. Here are the 5 points that the PM attempted to stand by - respect the referendum result, deal must last, jobs and security must be protected, to be the country we want to be, bring the country together.
The Pound-to-Euro exchange rate has steadily traded lower through the duration of the speech - the exchange rate was about 1.12 at the start of the speech and has fallen to 1.1186 midway.
While addressing business trade, May proposed “a trusted trader scheme, for businesses either side of the Irish border," - i.e. customs will not bother with checking small businesses in order to ensure no hard border is erected.
US Dollar – US Markets
The Euro has climbed against the US Dollar, exchanging at $1.23. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, is up, at 90.00.
U.S. stocks fell cuttingly on Friday, with losses picking up in a broad drop after President Donald Trump said “trade wars are good” a day after announcing that the U.S. would impose tariffs on steel and aluminum imports.
The day’s losses were far-reaching, with eight of the 11 primary S&P 500 sectors down on the day. Industrials, which are seen as having some of the highest concentration to trade issues, were among the biggest losers, falling 0.9%. Separately, technology shares were down 0.8%, as were financials.
Euro – European Markets
The Euro has remained steady against Sterling, with the exchange rate set at £0.89.
There has been further evidence of the strong Euro hurting the region as purchasing managers’ index fell to 58.6 in February, from 59.6 the previous month. IHS Markit who put together the survey stated that region is “still enjoying one of its best growth spells over the past 18 years”
The most heavily traded currency pair, EUR/USD, is likely to come under renewed downward pressure in the short- to medium-term as a raft of political risks collide.
The outcome of Sunday’s Italian General Election is still far from clear and remains capable of producing a shock result. Traders are being advised to keep close look on the progress of this.
Other Currencies – Highlights
Sterling has seen a slight decrease to the Australian Dollar, with the exchange rate at 1.77 AUD.
Same contraction is seen with Sterling to Japanese Yen rate too, exchanging at 145.31¥
Meantime Pound remains steady against the New Zealand dollar at 1.90 NZD.