Yesterday saw the markets endure a volatile day as the pound tanked on the euro and particularly the USD. The dollar has strengthened significantly in recent days, pushing commodities and stocks down yet again and keeping traders on red alert. The theme of the dollar strength is down to the talk of an imminent fed rate hike as US central bankers are now predicting them to raise interest rates far quicker than expected. This comes as a complete surprise for the markets as last week, the Fed sounded so dovish about any rate hikes until at least June.

Pound dips to 15 month low

Elsewhere this morning, the pound has come under increasing pressure from the euro, dipping to a 15 month low. With the EU referendum fast approaching and a Brexit gathering more momentum, especially given this week’s turn of events in Brussels, there are fresh fears for the UK economy. Should we see the pre referendum polls show any sign that a Brexit is on the cards, expect sterling to come under further pressure and break the 15 month low of this morning.

Today’s session sees UK retail sales out this morning which are expected to be considerably lower than previous sessions at -0.7%, highlighting a reduction in consumer spending over the past month. Later in the day we have FOMC member Bullard speaking, core durable goods orders and unemployment claims all out in the US.

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Article by Callum McGrouther, Corporate Dealer, Currencies Direct.
* Information courtesy of Currencies Direct
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