GBP/USD Continues To Be Influenced By Upcoming Referendum

AUD/USD

The pair was once again a key focal point for FX markets with AUD weighed on by disappointing Chinese data which showed industrial production expanding at the slowest pace since August 2008. AUD/USD broke below the 0.9000 handle for the first time since March 20th led by selling from Asia based banks while AUD/JPY printed a fresh month low near the 96.50 level. However, later on in the session, AUD/USD made an attempt to close the gap from the lower open overnight as US participants came to market and with a modest recovery in commodity prices after coming off their lowest levels seen in Asian trade. Looking ahead, attention now turns towards the release of the RBA minutes which are largely expected to echo the statement that accompanied the RBA rate decision, i.e the RBA are expected to maintain their current neutral policy stance.

GBP/USD

Fears over the prospect of an independent Scotland and the prospect of Fed tightening continued to dictate the price action for the pair during today’s session. Scottish Independence referendum opinion polls reported mixed results over the weekend, with Opinium Research poll placing the ‘yes’ vote at 47% and ‘no’ vote at 53%, while Panelbase poll put the ‘yes’ vote at 49% and ‘no’ vote marginally in the lead at 51%. Finally, the Survation survey suggested 54% of Scottish voters say 'no' to independence and 46% say 'yes'. Many commentators now suggest that the vote is too close to call therefore the uncertainty surrounding the referendum is likely to place further weight on the pair. Looking ahead, from a data perspective, attention now turns towards tomorrow’s UK inflation data with the headline CPI Y/Y figure expected to fall further to 1.5% from 1.6%.

EUR/USD

With a lack of fundamental newsflow or pertinent economic commentary from the Eurozone, the price action for the pair was dictated by increasing policy divergence between the Fed and the ECB. This week sees one of the most eagerly awaited FOMC rate decisions of the year with the Fed expected to change the wording of their current guidance. More specifically, analysts are calling for a hawkish shift in the Fed’s wording with the board expected to drop the phrase ‘considerable time’ from their rhetoric. This coupled with the current dovish outlook for the ECB placed further pressure on the pair during today’s session despite EUR/USD being provided some reprieve from a lacklustre US industrial production report. Looking ahead, tomorrow sees the release of the German ZEW survey with the headline expectations figure expected to fall to 40 from 44.3.