Home Monitoring Sterling Volatility
Daily Look

Monitoring Sterling Volatility

A calmer tone has emerged in the past few sessions that suggests the second half of the month could prove to be calmer than the first. We can see this in the fall in volatility measures from the highs recorded at the start of August. Equities have also recovered from the late July/early August sell-off from the year’s highs and we are also seeing stability in the dollar after the surge seen during July. Naturally, the geo-political tensions surrounding Russia and Ukraine remain in the background, together with the escalation of events in Iraq. So far, market implications from the latter have been relatively limited, but with more involvement from more countries, it could server to curtail risk appetite should events continue to run at the current pace

For the coming week, sterling volatility is likely to again be a risk given the release of inflation numbers on Tuesday. Last month’s reading was notably firmer than expected by much of this appeared to be down to the timing of summer sales, so some fall-back from the 1.9% reading is expected. The release of minutes to the August MPC meeting are also seen on Wednesday, but there were few signs from a Carney interview over the weekend (Sunday Times) of division between MPC members that would be reflected in some voting for higher rates. He also under-played the link between wage growth and interest rates, probably mindful of the risk of markets focusing too strongly on any one particular indicator , as proved to be the case with forward guidance and the unemployment rate last year (which fell a lot faster than expected). We’ve seen sterling take on a slightly firmer tone as a result during Asian trade, but so far with little follow-through during the European session.

Further reading:

EUR/CAD remains at risk

Forex Analysis: EUR/USD Stalls within Strong Bearish Trend

FxPro - Forex Broker

FxPro - Forex Broker

Forex Broker FxPro is an international Forex Broker. FxPro is an award-winning online broker, offering CFDs on forex, futures, indices, shares, spot metals and energies, serving clients in more than 150 countries worldwide. FxPro offers execution with no-dealing-desk intervention and maintains a client-centric business model that puts customer needs at the forefront of our operations. Our acquisition of leading spot FX aggregator, Quotix, enables us to offer access to a deep pool of liquidity, as well as top-class order-matching and some of the most competitive spreads in the market. FxPro is one of only few brokers offering Negative Balance Protection, ensuring that clients cannot lose more than their overall investment. FxPro UK Limited is authorised and regulated by the Financial Conduct Authority (registration number: 509956). FxPro Financial Services Limited is authorised and regulated by the Cyprus Securities and Exchange Commission (licence number: 078/07) and by the South Africa Financial Services Board (authorisation number 45052). Risk Warning: Trading CFDs involves significant risk of loss.