Yesterday, Prime Minister Theresa May officially initiated Britain’s exit from Europe. The lack of extreme market movement was touted by those seeing the departure as a sign of little trouble ahead. “We expect the triggering of Article 50 to initiate a ‘sell the rumour, buy the fact’ rebound in GBP from historic undervaluation as ambiguity over Brexit recedes,” currency strategists at Barclays wrote, saying the markets had overestimated the downside to the pound resulting from Brexit.
Sterling swung between $1.2478 and an eight-day low of $1.2377 on Wednesday before ending little changed, unable to find clear direction from Britain’s formal triggering of its exit from the European Union. HSBC sees the pound falling to $1.10 by the end of 2017 and the euro, currently around 86.40 pence, advancing to parity with sterling.
EUR/USD posted losses for the third session in a row so far today, extending the rejection from fresh 2017 highs just above 1.0900 the figure seen on Monday. The persistent pick up in the demand for the greenback plus recent comments by ECB officials talking down the March statement has been weighing on sentiment and prompted spot to shed more than a cent in the last three sessions.
The Aussie ended its 3-day upbeat momentum and retreated sharply from near four-day highs reached yesterday at 0.7677, as steep losses seen in gold and copper prices dented the sentiment around the commodity-driven AUD.
Crude oil prices surged following supportive EIA inventory figures. Stockpiles added 867k barrels last week, a smaller increase than the expected 1.03 million barrel gain. Also, underpinning prices were supply disruptions in Libya and growing optimism that the OPEC-led output cut by major producing countries would be extended beyond the June deadline.
Spot gold was up 0.1% at $1,252.35 per ounce at early trade. Spot silver slipped 0.1% to $18.14 per ounce. In the previous session, the metal hit $18.24, the highest since 2 March.
Across Europe, Germany’s DAX and French CAC 40 both rose around 0.4%.