Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
Sterling has been blasted lower after Bank of England governor Mark Carney cast doubt on a previously pretty-much-expected UK May rate hike. The European Union's rejection of Britain's latest Brexit-Irish border plan only served to deepen the rot. "The sterling rally is pretty much done and dusted," says John Hardy, Saxo's head of FX strategy.
"The most volatile currency this week has been GBP. Carney was trying to peddle the message that while he does see rate hikes out in the future, there is also weakness in the UK economy," Hardy adds.
For sterling, these factors mean that poor sentiment will persist pending "something very dramatic" on the Brexit front.
Elsewhere, the Australian dollar is reversing lower against it US counterpart, but higher against the kiwi while the greenback itself is perking up on the back of weakening risk appetite and higher US bond yields.
Meanwhile, over in equities, Saxo Bank head of equity strategy Peter Garnry says that the situation surrounding the beleaguered Rusol aluminium producer "has been catapulted to the highest level". US sanctions against Russia are preventing the company from selling its wares and this is beginning to have a negative impact on the global car industry, especially in Europe.
"In a worst-case scenario this could have a material impact on European growth," Garnry says.