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Sterling Stronger Across the Board

FOREX

Markets consolidated slightly Tuesday, with equity markets mulling over the sharp rally (and sharp retracement) on Monday. Equities in Europe posted decent gains, with the EuroStoxx50 closing higher by just over 1%. US cash markets, however, traded either side of unchanged. Volumes were, unsurprisingly, lacklustre relative to the activity seen Monday.

GBP was the best performer Tuesday, getting some support as markets rush to price out the likelihood of lower rates in the UK next year (driven by Monday's vaccine-induced rally), and could be benefitting from resistance in the House of Lords late Monday to the government's Internal Markets Bill, which could make including the elements that run against international law more difficult. EUR/GBP slipped below the 200-dma for the first time since May.

Market activity and volumes could prove slightly muted Wednesday, with US markets (notably fixed income) seeing a partial close for the Veterans Day holidays. This will leave focus on the RBNZ rate decision, where the bank are seen keeping policy rates unchanged as well as a speech from ECB President Lagarde, who kicks off the ECB forum on central banking.

MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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