Sterling Briefly Hits 5-month Trough
Sterling continues to come under pressure and is close to trading at its 5-month low on the reaffirmation of old news that the likely next Prime Minister will withdraw from the EU even if an agreement has not been reached. Boris Johnson, in an interview with the BBC, said he was serious about departing from the block without an agreement if there were no new negotiations. One currency strategist sees the months ahead as a showdown of sorts, with only three possible outcomes – a general election, a second referendum or a hard crash out of the EU, and he believes that the “no deal” scenario is considerably under-priced at this time.
As reported at 11:25 am (GMT) in London, the EUR/GBP was trading at 0.8946 Pence, down 0.1262%; the pair has ranged from a session low of 0.89430 Pence to a peak of 0.89740 Pence. The GBP/USD was higher at $1.2702, a gain of 0.1277% and well off the earlier low of $1.2663; the session high was recorded at $1.2706.
Dollar Feeling Pressure
In the US, the greenback is getting some support after comments made by key members of the Federal Reserve Bank. Jerome Powell, the Fed Chairman, pointed out that the Federal Reserve was an autonomous body and thus did not necessarily conform to the desires of the administration. James Bullard, the head of the St. Louis branch of the Federal Reserve Bank, said that he believed a cut in rates of 50 basis points would be “overdone;” Bullard is one of the Fed's more dovish members. Markets are still expecting to see at least three rate cuts this year alone.