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Sterling Higher After Obama Speech – 25th April 2016

Sterling Higher After Obama Speech

Barack Obama’s speech at the end of last week, in which he encouraged Britons to vote to stick with the European Union, has gone down well with investors who believe it improves the “Stay” campaign’s chance of success. That improvement, in turn, makes Sterling a less risky proposition. Mr Obama’s advocacy of Britain’s EU membership gave Sterling a double boost; one when its content was leaked on Thursday and another when he delivered the speech.

Sterling was therefore the top performing major currency on Thursday, narrowly beating the US Dollar and the Euro, but it was further ahead on Friday and over the weekend, strengthening by an average of 1% against the other dozen most actively-traded currencies. Sterling’s closest competitor between Thursday’s London opening and this morning was the US Dollar, which lost a cent to Sterling. The Antipodean Dollars, the Rand and the Norwegian Krone were all behind by 2% or more.

The European Central Bank’s policy announcement on Thursday was pretty much in line with investors’ expectations and had little impact on the Euro. Ahead of the ECB president’s press conference some investors were speculating that he might say rate-cutting and stimulus had reached their limits. Instead, he said what most were expecting; that the bank would take further stimulative action if it were to become necessary.

The week gets off to a potentially slow start, with holidays in Australia, New Zealand and Italy. There are few ecostats on the agenda, none of them being of top-tier importance. Sweden kicks things off with unemployment for March and Germany follows with the IFO measures of business confidence. At ten o’clock the CBI’s industrial trends survey could show a further decline in UK manufacturers’ order books. After lunch come US new home sales and the Dallas Federal Reserve’s manufacturing index.

None of those has much chance of shaking up the FX market so it will be a question to see if Sterling can hold onto its recent gains.