3 Mar 2016
Sterling extend gains even as UK economy loses momentum - BBH
Research Team at BBH, notes that the Sterling extended yesterday's recovery to poke briefly through $1.4100 and reached its highest level since February 23.
Key Quotes
“The $1.4125 area corresponds to a retracement objective since the EU Summit that struck the agreement with Prime Minister Cameron, which was shortly followed by London Mayor Johnson's decision to campaign for Brexit.
Although sterling's advance is mostly about market positioning and the unwinding of some momentum trades, including on the crosses, macro considerations have stalled its recovery. The service sector PMI today completed the trifecta of disappointing reports. All three - manufacturing, construction, and services - came in below expectations. The service PMI was expected to soften a little from the January 55.6 reading. It actually fell to 52.7, the lowest in about three years.
The surveys warn that the UK economy may be losing some momentum prior to whatever disruptions the Brexit uncertainty generates. However, positioning is still key and sterling may prove resilient to the disappointing economic news after the knee-jerk reaction as it has done in recent days.”
Key Quotes
“The $1.4125 area corresponds to a retracement objective since the EU Summit that struck the agreement with Prime Minister Cameron, which was shortly followed by London Mayor Johnson's decision to campaign for Brexit.
Although sterling's advance is mostly about market positioning and the unwinding of some momentum trades, including on the crosses, macro considerations have stalled its recovery. The service sector PMI today completed the trifecta of disappointing reports. All three - manufacturing, construction, and services - came in below expectations. The service PMI was expected to soften a little from the January 55.6 reading. It actually fell to 52.7, the lowest in about three years.
The surveys warn that the UK economy may be losing some momentum prior to whatever disruptions the Brexit uncertainty generates. However, positioning is still key and sterling may prove resilient to the disappointing economic news after the knee-jerk reaction as it has done in recent days.”