Sterling Dives Again !
25, September 2009
The combination of negative sentiment towards the pound’s value from the supposed Guardian of the currency, the Bank of England, coupled with international concern over the UK’s prospects going forward and rumours of the Bank calling a ‘crisis’ meeting of economists have left Sterling mighty vulnerable. As I said yesterday, it appears that any bounce in its value is solely down to Sterling shorts taking profits and then looking for a better level to re-open their short positions.
Expect a lull during the day but then a dip lower at the European close. The weekend press sentiment will be vital for Sterling’s health next week as the Far East seem to take what appears in the Sunday Times business comment as being gospel and trade accordingly.
Outside of Sterling, interest centres around the G20 get together this weekend and the Swiss National Bank. In Pittsburgh, the focus appears to be shifting away from the Global Financial Crisis towards wranglings over the make up and operation of the IMF.
Recent proposals from the US remove the UK and France from the board of the ‘new’ IMF, which, as I am sure you don’t need telling, didn’t go down well this side of the Atlantic. Watch this space…..
Suffice to say, I don’t expect much of substance related to currencies or interest rates but plenty of hot air about bankers’ bonuses and who should ‘rule the world’ in terms of Financial Centre.
The Swiss continue their battle against a stronger Franc, emulating King Canute in his abortive attempt to hold back the tide. The nearer we get to 1.50 in Euro/Swiss, the more vocal the Central Bank becomes. Expect lots of comment over the next few days.
Conversely, the new Japanese Finance Minister has affirmed that the BoJ will not embark on an exercise to weaken the Yen, for now anyway.
Bits and pieces out today but G20 the main point of interest
Expect more negativity surrounding the pound.
Report by Phil McHugh.
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Compiled by Tom Nadir.
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Posted in The Market Club Tagged: Bank of England, Currencies Direct, Currencies Direct and MarketClub Updates