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    Sterling, Euro Gain on British Referendum Pause

    The sterling jumped by the  largest amount in a month and the euro rose  in concert as the pressure on the European currencies  eased  somewhat with a pause in the vitriolic campaign over British membership in the European union. 

    The pound traded as high as 1.4388, almost two figures above the day’s low  as the suspension of public rhetoric brought on by the murder of Labor MP Jo Cox entered its second day.  The euro climbed modestly closing at 1.1280.

    Both currencies were aided by market confusion over the future course of Federal Reserve rate policy. Wednesday’s FOMC statement and Chair Janet Yellen’s news conference provided few clues about Fed economic thinking or the possible timing of the rate increases the Fed has repeatedly said it wants to institute.  

    The dollar fell against most of its major counterparties on Friday as fewer U. S. central bank officials said they anticipated raising rates more than once more this year.

    The Fed initiated its first rate hike cycle in almost a decade this past December with a 0.25 percent increase. At the time the central bank indicated it would likely raise rates four more time this year. Markets were skeptical that the U.S. and global economies were strong enough for such an aggressive rate campaign.

    Wednesday’s tacit admission by the Fed that market skeptics were correct leaves the futures markets as the most accurate guide to Fed policy.  

     

    Joseph Trevisani

    Chief Market Strategist

    WorldWideMarkets Online Trading

    Charts: Bloomberg

     

     

     


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