Posts Tagged ‘eu’

Speculators that are the most bearish on sterling in nearly 25 years may be vindicated by a report published on Monday (August 1) showing Brexit is probably hitting Britain harder than markets previously envisaged.

Sterling declined versus most of its 16 major peers as the data showed UK manufacturing shrank more than initially forecast in July.

Hedge funds and other large speculators ran the biggest net short positions, or bets on the currency’s decline, since records began amid speculation that the Bank of England will cut interest rates for the first time in more than seven years on Thursday, August 4 to head off the risk of recession.

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The pound tumbled to a new 31-year low on Wednesday (July 6), at one point dipping below $1.28, on fears over the effect of last month’s Brexit vote on Britain’s property market and the prospect of cuts in Bank of England interest rates.

The pound, one of the main vehicles through which financial markets can express concern about Britain’s decision to leave the European Union, fell as low as $1.2798 in Asian trading, its lowest since June 1985. It recovered to about $1.2891 in afternoon trading in London.

That still left it more than 13 per cent weaker than it was before the June 23 referendum, and about 1 per cent lower on the day.

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Scandinavia’s biggest bank estimates Denmark sold almost $750 million in kroner to weaken the currency after it became clear early on Friday (June 24) that Britons had voted to leave the European Union.

The flight into safe-haven markets triggered by Brexit drove the krone to its strongest level against the euro in more than a decade, forcing the central bank to intervene to defend its currency peg.

The bank probably sold about 5 billion kroner ($744 million) on Friday (June 24), according to Jan Stoerup Nielsen, a senior analyst at Nordea in Copenhagen. That follows a resumption of interventions to weaken the krone in May for the first time since February last year, when Denmark’s euro peg was under a speculative attack. Interventions in May reached 23.6 billion kroner.

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Prime Minister David Cameron has said Thursday’s (June 23) referendum on Britain’s membership of the European Union was likely to be very close but he also predicted a “remain dividend” in investments if Britons voted to stay in the 28-nation bloc.

With just two days to go until the referendum that will shape the future of Europe, opinion polls have indicated that British public opinion is so divided that the outcome is too close to call.

Meanwhile, Swiss investment bank UBS warned its clients on Tuesday (June 21) it may fail to execute some orders on its electronic trading platform should this week’s Brexit referendum affect liquidity or cause extreme volatility.

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With sterling trades seen too expensive, the yen and Swiss franc are in demand according to in-depth research by news agency Bloomberg.

The UK’s referendum on European Union membership is spurring volatility in the pound, making trading sterling increasingly expensive. Banks are pointing clients toward alternative currency bets or hedges that could fare well regardless of the outcome.

Here is a list of analysts’ favourite trades as written in research notes or recommended in interviews conducted by Bloomberg News in recent days.

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The pound rallied the most in three weeks after a poll of UK voters released on Monday showed people who support a campaign to remain in the European Union exceeded those saying they will vote to leave by a wider margin than last month.

Sterling rose against most of its 16 major peers after the ORB/Telegraph poll showed 55 percent of respondents were in favour of remaining in the European Union, while 40 percent wanted to leave.

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All eyes have been understandably focused on Greece during the past week. What appeared to be a rather tenuous bailout offer has been accepted by the Greek parliament and pushed through at the eleventh hour by the European Union. While the massive €80 billion euros required to ease the financial tensions and imbue liquidity into the Greek economy may be a welcome development, many investors are still wary in regards of the long-term damage that could have already been done to the euro as a whole. (more…)

Weakened Euro continues

The recent financial turmoil for the Euro continues. Despite extensive funding programs from the European Central Bank, which was presented on March 1st, the EUR currency fell further against both the Japanese Yen (JPY) and the American Dollar (USD).

A lot of efforts

The efforts to curb the crisis in the Euro-area is (more…)