It was a relatively quiet economic docket yesterday as we began the last trading week of the year. GBP/USD slid 1%, extending its losses to its lowest level in nearly a month as flows remain thin and technical levels weigh on the Pound. The currency pair is now approaching the 50-day moving average and if broken we could see a continuation of this weak Sterling trend.
Markets continued to digest Scottish First Minister Nicola Surgeon’s weekend comments. Sturgeon said that Scotland will hold a new referendum on its place in the UK should Britain lose access to the single market after negotiations have concluded. The uncertainty is beginning to filter through to the Pound after Sturgeon signalled that access to the EU’s single market is more important than Scotland’s membership of the UK.
The Yen has had a tough year, with a lot of the beating coming after the election. We could however see some fightback at today’s Bank of Japan rate decision and press conference. The BoJ are forecast to keep rates on hold at -0.10% but if the central bank can avoid a dovish tone we could see the Japanese Yen strengthen across the board.