020 7898 0500Sterling has continued on its relentless fall against its major peers yesterday, after Brexit rhetoric dominated the direction it took. Liam Fox’s comments over the weekend added fuel to the fire, stating that he now saw risks of a no-deal, due to the stubbornness of the EU, at 60%. A leading French bank stated that there could be a fall below 1.20 on GBPUSD in the case of a no deal. Rabobank also stated that a hard Brexit could send GBPEUR to parity.
GBP saw new lows for 2018 yesterday versus the EUR and there is suggestion from some of the leading American banks that a no deal scenario could see the pound fall a further 10 percent versus the USD. What is clear is that the market is now ignoring traditional data points when it comes to Sterling. The interest rate hike from the Bank of England last week proved this, with very little favourable movement from Sterling after the hike. The market is now focusing on politics for direction.
Though data may not be taking centre stage, Friday’s preliminary UK GDP figure will be watched for support for the decision the Bank of England took. A poor figure here could make the market consider the idea that the Bank of England may need to cut interest rates again in future meetings, which would not help credibility during this uncertain period.
