By Connor Campbell, Financial Analyst, Spreadex
After an incredibly flat start the pound took a dive this Wednesday, the currency infected by a bout of Brexit bearishness.
There’s not really been much to force sterling lower against the dollar and the euro. The former has admittedly seen something of a comeback this week following a fortnight of macro-economic losses; the latter, meanwhile, received a bit of a boost from a better than expected eurozone manufacturing PMI (even if the services reading was worse than forecast).
Yet neither fully explains why the pound is doing quite so badly. Cable has slipped under $1.28 for the first time since the end of June, while against the euro, sterling has plunged another half a percent to hit a fresh 8 year nadir. With little else going on in the UK, it seems investors have been left to speculate about the state of the Brexit negotiations, rarely a good thing for the health of the pound.
The euro’s surge – its sterling gains were joined by a 0.2% rise against the dollar – sapped the energy from the eurozone indices, with the DAX and CAC now both down around 0.1%. As for the FTSE, the pound’s miserable morning meant it could shrink its losses, though WPP's (LON:WPP) 11% plunge meant the UK index was still down 0.2%.
Looking to this afternoon and the Dow Jones is set to join its peers in the red with a 35 point fall when the bell rings on Wall Street. Like the eurozone, the USA’s main focus this Wednesday is on its manufacturing and services PMIs; the former is set rise 0.1 to 53.4, while the latter is forecast to jump from 54.7 to a 7 month high of 55.0.
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