Analysis / Daily / Finance / forex

Sterling slips against dollar after Queen’s speech.

One Pound
Sterling hit its weakest against the dollar since the aftermath of the UK’s national elections on Wednesday, after a speech by Britain’s queen to parliament set in motion a referendum on the UK’s membership of the European Union. Queen
Elizabeth announced early legislation to provide for an in-out vote before the end of 2017. Prime Minister David Cameron now faces pressure to explain exactly when it will be held and what changes to the EU he wants. Sterling fell as much
as 0.6 percent against the dollar to trade at $1.5301, its weakest since May 8 – the day that it was announced that Cameron’s centre-right Conservative party had triumphed in Britain’s parliamentary elections with a surprise outright
majority. Analysts have been flagging concerns about a possible “Brexit”. Many say the risks to a UK economy, which relies on inflows of investment and capital to fund its 100 billion-pound current account deficit, are greater now than they were during the Scottish independence referendum in September 2014.

euro

Reports that Greece is nearing a deal with its creditors delivered a jolt to eurozone assets yesterday, as Greek officials said the country is nearing a deal with its international creditors The Hellenic Republic is bracing for a €1.5 billion debt-service payment to the International Monetary Fund scheduled for June 5. Yesterday, European and Greek markets got a boost after a Bloomberg report indicated that Greece and its creditors were drafting up a “staff level” agreement, citing an unnamed Greek official. European stocks, Greek bonds and the euro all moved higher early in the North American trading session on the reports. These gains were extended after Greek Prime Minister Alexis Tsipras told reporters in Athens that the two sides are on the “final stretch” toward a deal.

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The dollar hit its highest level in more than 12 years against the yen in Asia Thursday, with the U.S. currency’s rapid pace of gains putting market participants on alert for any signs of discomfort from U.S. and Japanese government officials. Investors are going to be intently watching to see how currency authorities react to the rally. They will be paying particularly close attention to any kind of in-depth remarks coming from top officials at the coming Group of Seven finance ministers meeting in Germany. Japan’s top government spokesman stopped short of saying that the latest fall in the yen wasn’t rapid. Chief Cabinet Secretary Yoshihide Suga said at his regular news conference that the government will continue to watch the foreign exchange market closely, adding that there was a G-7 consensus that rapid moves in exchange rates were “undesirable”.

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