Good day

GBP – All that doesn’t shine. Having traded below 1.39 only yesterday, we have seen the “mighty” Pound bounce back to trade over 1.40 this morning…albeit (I think) not for long. I am afraid the referendum on the 23^rd June is playing havoc with the Pound and this is only likely to get worse as we get closer to the date. Boris, you have not done us any favours. While the exit polls are currently showing a win for the STAY camp, you can be rest assured this will change as the different polls predict a different winner. One thing is for certain, if the LEAVE camp win, the Scots will call for another referendum to gain independence which will add insurmountable pressure on the beleaguered Pound. Already we have seen (vs the EUR) the GBP suffer immense pressure trading below 1.2650 and looking bleak. Amazing that only a month ago we traded above 1.42 ….how the mighty Pound has fallen!!! They should write a book, GBP has fallen (rather than London). Honestly if you asked me right now what I thought going forward my answer would be, it’s going to be a bleak period for the GBP, so best to get your hedging in place or face the risk of having to pay more GBP for your foreign currency. It’s inevitable.

I mentioned only a few days ago that Central Banks globally are facing crunching times ahead as the global economy hits the skids. Mark Carney of the BoE has warned that Britain and other countries risk becoming trapped in a world of low growth unless governments implement vital reforms. The Governor of the Bank of England warned that “sizeable downside risks” were currently “plaguing” the global outlook. While China has (gladly) been out the news over the past few weeks, the market still anticipates bad news is around the corner.

San Francisco Fed President Williams said Thursday that with the economy strengthening, “it just makes sense” to continue gradual policy tightening. At the same time, he acknowledged that overseas headwinds had grown since the central bank increased rates in December for the first time in almost a decade. “There are big movements going around in the global economy and inflation that we have to adjust to.” Interesting comments considering FED chair said in January the time to increase rates had passed for now given the disappointing US data and global economy. I guess Williams was trying to “talk up the US” as being better than it looks. As far as I am concerned as things stand we should expect 2 US rate hikes this year, rather than 4 expected in December.

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