Pound plunges as Boris throws the cat amongst the pigeons
Currencies Direct February 22nd 2016 - 2 minute read
A break-through week for David Cameron’s referendum campaign was turned on its head this weekend after comments from Boris Johnson well and truly threw the cat amongst the pigeons.
David Cameron spoke to an anticipating audience on Friday, letting the world know that he’d secured a deal with EU bosses for the UK’s “special status” in the EU. Little did he know that Mr Johnson was about to back the opposing assembly.
The Mayor of London, although firstly stating he did not wish to go against the wishes of the Prime Minister, openly backed a ‘Brexit’ and sparked a reaction in the markets when he declared that the current referendum is a “once-in-a-lifetime chance to vote for real change”. As well as the Mayor of London, six Cabinet Ministers are also campaigning along the same lines, however, they face a fight from some heavy hitting UK businesses who clearly want to stay within the EU.
Sterling has started today on the slide, moving below GBPEUR 1.2765 and GBPUSD 1.4155. Uncertainty about the result on 23 June will no doubt play its part to weaken the pound further until voting has closed and we have a definitive answer.
Three Fed rate rises off the cards
This week we have a host of economic figures to dismantle and key note speakers will all be treading carefully after last week’s volatility.
The Federal Reserve will be watched with an air of caution. After skipping into 2016 with a spring in their step, the ‘three’ further interest rate hikes have been washed away by uncertainty in the global economy. Volatile commodity prices and lower oil prices are not making it difficult for the Fed to plan ahead, and the next move will have to be made with a degree of care.