Brexit balance moves Sterling higher

The “Obama effect” continued into the beginning of this week, as Sterling pushed higher against USD (1.4520) and EUR (1.2890). The bookmakers have now moved the odds to massively favour the UK staying in the EU. The Pound was also helped by CBI industrial expectations, which to +1 (up from -2).

On the open, Sterling has pushed higher again to EUR1.29 and USD1.4535.

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In the Eurozone, yesterday kicked off with the German IFO data falling short of expectations but with little else on the calendar, the Euro was reactive throughout the day, continuing to feel the weight of market sentiment after the ECB kept monetary policy unchanged last week. With nothing on the calendar today, expectation is for the single currency movements to be driven by counterparty performance. We could see a fairly quiet day as the main focus remains on the FOMC tomorrow.

From the US, we will see US durable goods and consumer confidence data on the calendar this afternoon. Forecasts are for a positive goods figure and pretty average consumer confidence. Any reaction is expected to be limited ahead of the FOMC meeting tomorrow.

The JPY gained against most major counterparts overnight as profit-taking set in against the currency’s recent sharp movements. The market is uncertain over the BoJ’s monetary policy and is currently debating negative rates. Is it a realistic measure for the BOJ to lend money out to their banks and receive less money back in return? But having tried pretty much everything else, arguably their options are limited.