Pound Sterling down over 2.0% as Brexit fears intensify

Feb 22, 1:16 pm
pound on flag

Today’s Economic events

  • RBA Assistant Governor Debelle speech
  • Japan flash manufacturing PMI 50.2 vs. 52
  • New Zealand credit card spending y/y 8.90% vs. 7.40% previously
  • France flash manufacturing PMI 50.3 vs. 49.9
  • France flash services PMI 49.8 vs. 50.4
  • Switzerland PPI m/m -0.40% vs. -0.20%
  • Germany flash manufacturing PMI 50.2 vs. 52.1
  • Germany flash services PMI 55.1 vs. 54.8
  • Eurozone flash manufacturing PMI 51.0 vs. 52.1
  • Eurozone flash services PMI 53.0 vs. 53.4
  • UK CBI Industrial order expectations -17 vs. -11

Coming up

  • US Flash manufacturing PMI
  • Australia CB leading index m/m

The US Dollar opened on a mixed note today after easing back late Friday despite strong inflation data. The Yen opened weaker against the Dollar today with the Asian equity markets posting a modest rally. The Nikkei225 index closed the day with 0.90% gains while the Shanghai Composite gained 2.37%. The Yen declined as USDJPY opened the day at 112.6 and continued to push higher towards session highs near 113.3. At the time of writing, USDJPY is up 0.54% for the day. Flash manufacturing data from Japan released today saw a soft print at 50.2 against expectations of 52.

The commodity risk currencies remained broadly stronger. AUDUSD continued to keep its gains from Friday, rising to session highs of 0.718. The Aussie is up 0.65% for the day against the Greenback. The NZDUSD also surged since the opening session, testing session highs at $0.6661. At the time of writing, the Kiwi is up 0.58% for the day.

The European session opened today with the British Pound taking the center stage. GBPUSD fell sharply as the European markets opened losing over 1.90% for the day marking one of the strongest intraday sell-offs this year. The Sterling weakened as British PM Cameron announced June 23rd for the Brexit referendum to be held. Meanwhile, he faced opposition with London Mayor, Boris Johnson announcing that he would campaign for the UK to leave the EU. At the time of writing, the ‘Out’ camp seems to be having the upper hand, sending the Pound lower. GBPUSD is currently trading at $1.408 down 2.02% for the day.

The Euro was also weaker against the Dollar as flash manufacturing and services PMI data showed a weaker print, with the Eurozone flash PMI’s hitting a year low. The Euro fell since the open today with a down gap and is down 1.0% for the day. EURUSD is currently trading at $1.102 falling below Friday’s low.

The European equity markets, however, are trading in the positive, ignoring the geopolitical risks. The London FTSE100 is up 1.28% at the time of writing while the German DAX is up 1.65%.

The NY trading session opened today with a focus on US flash manufacturing data due for release later this evening. US futures markets are looking a stronger open. The Dow Jones futures are up 1.06% while the S&P500 futures are up 1.11% before the market open.

On the commodity front, Gold prices are seeing the second day of declines as prices retreated off the highs near $1230 from Friday. Gold is down over 1.40% for the day, trading at $1210 an ounce. Meanwhile, WTI Crude Oil prices managed to rebound from Friday’s lows at $29.15. For the day, Crude Oil has gained over 3.50%, trading near the day’s highs of $30.95.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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