Sterling remains strong ahead of Scottish referendum

Thursday, September 18, 2014

European equity markets extended gains in today’s trading session, as risk appetite increased despite some signs of uncertainty about the results of the Scottish referendum. The CAC, DAX, IBEX and the London equity benchmark rallied strongly between 0.45% and 1.2%. In addition, the euro recovered and climbed strongly, eyeing the 1.2950 level.


EURUSD Curncy (EUR-USD X-RATE)  2014-09-18 16-21-17

On the macroeconomic front, the US Philadelphia business index rose to 22.5 in September, beating estimates of 23.0, while US weekly jobless claims fell to the lowest level in 2 months as the number of Americans filing new applications for employment declined by 36,000 to 280,000 for the week ending 13th September 2014. However, US building permits rose by 998,000 barrels in August, missing Bloomberg’s estimates of a 1.04K rise.

In the UK, retail sales climbed by 0.4% in August in line with expectations, offering further support to sterling which rallied above 1.64 for the first time in 2 weeks.


GBPUSD Curncy (GBP-USD X-RATE)  2014-09-18 16-20-54

Gold edged higher towards $1230/ per ounce at the time of writing, while silver followed the uptrend and rose above $18.50. However base metals prices remained under pressure following the weak housing Chinese economic data which weighed on market sentiment. Copper slid lower to retest $6850, while Aluminium retreated below 1990.

Tomorrow, all eyes will be on the results of the crucial Scottish referendum as the first results are expected in the early hours of Friday morning, with the expected declaration to be around 7am tomorrow. Investors could remain cautious ahead of the announcement, while sterling might remain fairly volatile until the official result of the referendum.

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