Proud pound pulls no punches – Investec

Research Team at Investec, suggests that yesterday proved to be fairly positive for sterling with moves higher versus both the Euro and US Dollar.

Key Quotes

“Early morning slightly worse than expected German ZEW data, combined got the Euro off to a shaky start, then Moody's announced a downgrade of Deutsche Bank’s credit rating, stating that the German lender faces mounting challenges in carrying out its turnaround. This further dented the single currency and sterling continued to rally.

The interesting dynamic here is that investors and speculators alike seem slightly less concerned to buy sterling, as it would appear they are less nervous about the impending referendum and potential Brexit. This increased confidence is supported by strong polls for “remain” which have pushed GBPUSD to 1.46 and GBPEUR to 1.31 at the high overnight.

Looking across the pond yesterday was strong for the USD vs G10 (except against GBP), slightly better than expected New Home sales data, growing by 16% in April, helped provide a case to buy the greenback,. Janet Yellen speaks on Friday and the first revision to Q1 GDP is out on the same day, so the end of the week looks key for any clients with a USD exposure.”