Forex snapshot

Scottish referendum issues continue to dominate GBP/USD while EUR/USD drifts lower.

Pound and dollar currency
Source: Bloomberg

GBP/USD affected by referendum

The news that Scotland will remain as part of the Union will be welcomed by many. Bank of England governor, Mark Carney, will be relieved that his previously inferred interest rate rising timeline of spring 2015 will now not be affected. One obstacle that could appear in that path, however, is the increased chances of constitutional change to the structure of the UK.

GBP/USD initially added to yesterday’s rally and in Asian trading was as high as $1.6524, however, since then has subsequently fallen away. The $1.66 level above coincides with the 50-day moving average and judging by this morning’s price action, could become a jump too far.

EUR/USD finds support at $1.2900

EUR/USD continues to tread water and it has now spent the last couple of weeks effectively travelling laterally. The $1.2900 level has offered some sort of support as the rate has oscillated either side of this. The news that European banks had only taken up €82 billion of the offered targeted long-term refinancing operation did not have too much of an effect on the price. This can partially be explained by the perceived lack of risk appetite for banks ahead of the key stress test. Once this stress test is completed the December offering could be taken up more keenly.

This weekend will see the latest G20 summit where Russia will be top of the list, and fresh discussions over sanctions are unlikely to offer EUR/USD much in the way of support.

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