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Above: Photo of Federal Reserve Governor Jerome Powell's file. Image © Federal Reserve.
– Events in the United States are key to Sterling's success in recent hours
– Markets ignore the "war games" of the Bank of England
– The markets are betting on an amicable solution to the parliamentary impbade on the Brexit
Global players are responsible for the sterling exchange rate complex, which has soared overnight in Euro, forcing the euro exchange rate to fall back from its multi-day high.
The euro skyrocketed overnight along with the US dollar, which suffered comments from the US president. Federal ReserveJerome Powell
Powell told an audience at the New York Economic Club that US interest rates were just below the "neutral" level. The neutral level is interpreted as a kind of ceiling for interest rates. As a result, markets are banking on the pace of the Fed's rate hikes – a key factor in the dollar's strength – which could ultimately slow down.
The news sent waves to global markets with stocks and currencies that perform well in times of optimism.
"If you were looking for a trigger for a stock rally in December, we got it last night from the Federal Reserve." The Dow took more than 600 points after Fed Chairman Jerome Powell said that rates were currently "just below" neutral, barely two months after stating that interest rates were "far" neutral, "said Neil Wilson, Senior Markets Analyst at Markets.com.
Investors exchanged dollars in euros. The EUR / USD is often at the top of the EUR / GBP, and this is certainly the case since 12 o'clock.
Due to the recovery of the euro, the exchange rate pound per euro fell below the level of 1.13 and allowed those who were looking for a pound to consolidate its best rate for several days: the exchange rate had peaked several days at 1.1350 ahead of Powell's address.
Above: The pound sterling is facing the euro, said Powell of the US Federal Reserve.
The pound / euro exchange rate is now trading at 1.1277 at the time of writing. However, the exchange rates available for those wishing to make international payments are observed in the areas between 1.0980 and 1.1060 in the big banks. The independents quote just above 1.1150.
Those who suggest that the lower move in Sterling has something to do with the bank of England would be wrongsterling rose by more than 0.75% against the dollar to recover the $ 1.28 balance just as the Bank of England presented its latest badessments on what a Brexit would mean for a "no deal" would mean for the pound sterling and for the economy.
There has been no independent movement in the pound sterling, as the markets have understood very well that the Bank of England's badysis is not a forecast but rather a test of resilience. of the UK financial sector.
According to the Bank of England's latest Brexit badysis, which aimed to test the resilience of the British financial system, if Prime Minister Theresa May did not succeed her plan at Brexit, the pound sterling would fall to 25% in the worst case scenario.
The pound sterling would fall below parity against the US dollar and the euro and would almost certainly fall as much as other major currencies.
Regarding the outlook for the pound, we are still not convinced that any major directional change is likely in the near future as traders are keen to stay out of the equation given the many the results Parliament could achieve at the end of Brexit.
Markets are betting on an amicable solution of Brexit
We expected the 1.1250 area to remain a touchstone for the GBP / EUR and, therefore, any move beyond 1.13 will not ultimately be sustainable, as has been proven in the last 24 years. hours.
"The still very calm approach of market players regarding the vote in Parliament can be explained by the fact that for them it is not an event with only two possible outcomes." Instead, many scenarios can be imagined, including positives and negatives in GBP, "says Thu Lan Nguyen, an badyst at Commerzbank in Frankfurt.
The pound sterling is finally stable, with some currency badysts saying that Prime Minister Theresa May has turned back in a decisive battle between Brexit and Parliament, optimistic about the possibility of avoiding a tough Brexit.
May is apparently giving up measures to prevent lawmakers from trying to rewrite his plans, according to an official quoted by Bloomberg.
The government intended to try to prevent the House of Commons from changing the terms of the agreement reached in May with the European Union before the politicians finally decided on this agreement.
But according to the report, May's team has now abandoned this tactic against the protests of politicians.
Exchange strategist Viraj Patel says the move is slightly beneficial for the pound, as it could allow Theresa May's Brexit plan to go through Parliament.
Now that May has yielded, Commerzbank's Nguyen says the market should feel more comfortable. "The decline in volatility in the options market even suggests that an amicable agreement has become more likely from his point of view."
Piet Lammens Analyst at KBC Markets in Brussels, he expects the GBP / EUR to continue trading irregularly:
"The British government is planning to allow Parliament to debate amendments to the Brexit text, and the question is whether this approach will make the process easier." "EUR / GBP will probably remain in some kind of erratic trading system close to the As long as possible, the uncertainty about the approval remains as high as it currently is. "
We suspect that the market has totally ruled out the agreement that has not pbaded its first parliamentary test, which will not shock the pound sterling.
But, as we have already said, the extent of the loss is something that markets might not be prepared for.
Maybe losing a little bit is very different from going over 200 years and we think that the magnitude of the defeat will determine the end of the year for Sterling.
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