GBP reclaims some losses, expect more volatility
Today is September 11th and regardless of everything else that is happening in the world at the moment, there is always the need to stop for a moment and reflect on events that “changed the world as we knew it”
A Swing Back
The markets are still being driven by the Scottish question. Yesterday saw the ‘No’ campaign put the pressure on in a way not previously seen as Cameron and Miliband (Clegg was there as well by all accounts) practically begged Scotland to stay as part of the UK.
The campaign also received substantial backing from BP, Standard Life and the Royal Bank of Scotland, who all confirmed that they would move substantial parts of their business from Scotland to London if Scotland gained independence. Coupled with a swing back in favour of a ‘no’ vote in the latest poll, we were promised volatility in the markets yesterday and we got it.
Mark Carney also put the boot into the independence campaign yesterday by commenting on how a Scottish Central Bank without any control of Sterling would hardly be a credible option and the country would need to build up reserves totalling more than the size of the country’s economy if it wants to keep using Sterling. In other words, “don’t bother”.
Thanks to all this, we saw the Pound claw back some of its losses against Euro and Dollar. I would expect to see increased volatility and many more twists and turns for the next week.
Focus in the Eurozone today is on Mario Draghi, who is speaking about re-launching growth in the EU. It is expected that he will say more about institutional issues than the latest asset-backed securities programme.
Other than Draghi’s speech, there are jobless claims from the US and very little else