Market Intelligence: Pound by Reuters


© Reuters Photo file: Pound and US dollar notes are seen in this illustration taken on January 6, 2020. REUTERS/Dado Ruvic/Illustration


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Sterling’s free fall hit new lows as investors lashed out at British Finance Minister Kwasi Kwarteng’s bailout program and unfunded tax cuts.

The pound, the most liquid to bet on the program’s success, hit a 1985 low in the Asian session at $1.0327. It’s only the latest in the recent turmoil in financial markets. On Friday, gilts faced their biggest sell-off in decades, and before that, yen and US interest rate futures tumbled. [MKTS/GLOB]

For sterling, dollar and euro parity is now being witnessed and speculation is rising – verbally or otherwise – of a response from the Bank of England.

Elsewhere, pressure is building.

Italy on Sunday elected its most right-wing leader since World War II, Giorgia Meloni. The results of its relatively weak euro-skeptic allies, the League and Forza Italia, could temper the extent to which the balance of power in Europe shifts.

Global tensions are rising over the war in Ukraine, as Russia’s increasingly critical bid to recoup territory it seized by force has drawn criticism.

By annexing the regions of Luhansk, Dneetsk, Kherson and Zaporizhia into Russia – which could happen this week – Moscow could interpret any attempt to recapture them as an attack on Russia itself.

Apart from sterling, Asian stock markets fell on Monday. European futures were down 0.3% and 0.6% respectively.

Key developments that could impact the market on Monday:

Economics: Eurozone July construction output, Germany’s Ifo business sentiment survey

Speakers: ECB’s Christine Lagarde, Bank of England policymaker Silvana Tenrero

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