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Pound rallies as Sturgeon dismisses ‘wildcard’ indyref

currency-newsPound rallies as Sturgeon dismisses ‘wildcard’ indyref
The pound firmed on Wednesday as concerns eased that Nicola Sturgeon could seek to hold a ‘wildcard’ independence referendum.
Meanwhile, Sterling is trading in a narrow range so far this morning, with GBP/EUR muted at €1.1566 and GBP/USD flat at 1.3908. GBP/CAD is rangebound at C$1.7041, while GBP/AUD and GBP/NZD hold steady at AU$1.7958 and NZ$1.9298, respectively.
Looking ahead, will an upgrade to the Bank of England’s (BoE) annual growth forecast help to bolster GBP exchange rates today?

What’s been happening?

The pound rallied through yesterday’s trading session after Nicola Sturgeon dismissed suggestions the Scottish National Party (SNP) might hold an ‘illegal’ independence referendum if her party is able to secure a majority in Holyrood following today’s election.
This came as a major relief to GBP investors who have raised concerns over the political and economic uncertainty such a move could have on the UK.
The US dollar also strengthened on Wednesday in the wake of comments made by US Treasury Secretary Janet Yellen late on Tuesday, in which she suggested interest rates may need to rise if inflation continues to accelerate.
However, the US dollar’s gains were tempered following weaker-than-expected ISM non-manufacturing PMI and ADP employment releases.
This uptick in the US dollar left the euro on the defensive again yesterday, with the pairing’s negative correlation undermining any potential gains from a stronger-than-expected Eurozone services PMI.

What’s coming up?

Top of the agenda today will be the BoE’s latest rate decision later this afternoon.
While no policy changes are expected from the BoE this month, analysts are expecting a more upbeat tone from the bank, as data points to the reopening of a large part of the UK economy unleashing a strong pick-up in consumer spending.
If this results in an upward revision to the BoE’s 2021 growth forecast, then we are likely to see the pound strengthen.
In the meantime, the euro could receive some support this morning after Germany reported a healthy acceleration of domestic factory orders in March.
For USD investors, the focus today will be on the latest US initial jobless claims, with the US dollar potentially strengthening if new claims continued to fall last month.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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