Market News & Analysis
Pound sinks ahead of Brexit vote
Fiona Cincotta March 11, 2019 10:07 AM
The possibility of being able to avoid a hard Brexit should have been enough to keep the pound above the current level but instead the currency is reflecting the sinking feeling in the City about what will come next. UK stocks are the only market benefiting from the uncertainty this morning as the weaker pound is working in favour of export orientated blue chips.
BoE preps banks ready for no-deal Brexit
Always working on being ready for the worst case scenario the Bank of England has asked UK banks to triple their liquid assets so that they can buffer a financial shock if they need to. This would mean being able to withstand a situation in which banks don’t lend to one another for 100 days, rather than the normal 30 day period. And if this wasn’t enough to stress the City a UK think tank reported that close to 300 financial firms are in the process of moving nearly £1 trillion in assets from Britain into the EU, a trend that will weigh on the pound for months to come.
Dollar steady despite the negative economic news
In contrast, the dollar is holding its ground, but this has more to do with the pound’s and the euro’s weakness than an inherent dollar strength. Recent US economic news has started to show a far more negative picture than in late 2018. US retail sales have dropped to their lowest level in nine years, construction has sharply contracted and job creation seems to have ground to a halt. Granted, the numbers are exaggerated by the protracted government shutdown in December and January, but the underlying trend is still negative.
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