Roller coaster markets: has sterling now based? - ANZ

Analysts at ANZ noted that following on from the flash crash during the Asian time zone, the pound had a roller coaster London trading day on Friday.

Key Quotes:

"Whilst recovering to close around opening levels, sentiment towards sterling remains very low. Recent economic releases do look encouraging, but the uncertainty of leaving the single market is causing enormous concern over the future of the UK economy and the funding of its twin deficits (with the current account and budget deficits together around 10% of GDP). 

Moreover, the rhetoric from the UK government on immigration and EU legislation has hardened of late at the same time as the EU’s position is also hardening. We suspect the outcome will probably lie somewhere in between, but negotiations will take a long time and EU national governments are unlikely to want to compromise given the forthcoming elections in France and Germany etc. At this stage, it is still impossible to say if the GBP has based or is basing."