Saxo Morning Call

Sterling rallies weakly as tech sector crumbles

Clare MacCarthy
Senior Editor, Saxo Bank

News that the European Union and the UK had agreed on a 21-month Brexit transition deal propelled sterling higher yesterday but some gains were subsequently lost as doubts crept in. Sterling faces a difficult week between today's CPI, tomorrow's Bank of England meeting, and the EU summit in Brussels on Thursday and Friday.

"Expect a weak Swiss franc and strong sterling if the pound survives the next few days," says John Hardy, Saxo's head of FX strategy. 

Meanwhile, the US dollar has edged back lower ahead of tomorrow's Federal Open Market Committee meeting, with markets almost 100% certain that a rate hike will be announced. "I'm not sure what the driver is here, of course we don't know what Powell is going to say, but my general stance is that he's not going to want to be very specific on guidance. So while the market is discussing whether we'll see two, three or four hikes [this year] I think Powell won't want to be tied down to too explicit a forward guidance. The takeaway will be on intangibles – his demeanour, his stance and his answers in the Q&A," Hardy says.

In equities, meanwhile, the story of the week (and probably longer) is the technology shakedown which saw the Nasdaq 100 fall 2.2% yesterday, driven by Facebook, which is under scrutiny because of the Cambridge Analytics data misuse allegations. "Facebook shares fell 7% and the hashtag #deletefacbook is spreading rapidly on the internet. This has the potential to have a severe impact on engagement numbers," warns Peter Garnry, Saxo's head of equity strategy.

In commodities, "we're seeing a bit of a two-way market with crude oil trying to break to the upside and industrial metals looking heavy to the downside," says Ole Hansen, Saxo's head of commodity strategy. Crude’s breakout attempt is supported by high Opec compliance on tumbling Venezuelan production and Middle East security concerns (Saudi Arabia vs Iran and US sanctions return). Against it is the rising risk of a demand growth-killing trade war, weaker stocks and rising US stocks, Hansen says.

Finally today, in precious metals, the tech rout has paused the gold and silver selling we've seen the past few days in the run-up to the Fed meeting. But there's no end yet to the problems of grains and soybeans which remain troubled after their recent protracted buying spree.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.