Good morning,

Markets drifted through a quieter Monday with the end of the week very much on the mind. With bumps in the road and phones put in pockets, the race continues to heat up. Tonight the infamous YouGov poll will be published. Renowned for its accuracy in projecting Theresa May’s loss of the majority, this release will likely be taken as good guidance, rightly or wrongly.

The Pound has strengthened more than 9% against the USD since August, which may well be substantiating the theory that the anticipated pound spike expected from a Conservative Majority is already well on its way, which begs the question, how much further would the pound move under this outcome. Option pricing seems to support this theory, with pricing massively increasing around the GBP, a clear indicator of focus on downside protection.

The US Dollar will be subject to US/China developments for the most this week, while for once the Federal Reserve is likely to take a back seat, with the rate decision this Wednesday all but expected to remain within expectations with no discussions of monetary policy alteration.

The UK GDP data today will be of interest to gauge whether the weaker PMI numbers we have seen truly indicate a slower growing economy due to global slowdown and Brexit uncertainty. The impact on volatility may not match the interest, with politics commanding the pound at the moment.

Have a great day.

Author: Ross Hammond, Senior Corporate Account Manager


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