Last night’s US session saw the Dow Jones finish at a new all-time closing high, with a fresh intraday high to boot, and the positive momentum has been carried across into the morning session in London. Added to this was news last night that the ‘No’ campaign still has the advantage – albeit a small one – over its rivals.
The IG binary has seen the ‘Yes’ chance edge back to 19%, its lowest level since 12 September. With the postal votes having already been cast (and many of those likely to incline towards the Union), the ‘Yes’ campaign still has to make up much ground on the day, even with its late-stage surge in the polls.
The stage is set for some significant volatility in GBP/USD during the overnight session on Thursday, with moves exacerbated by thinner volumes. Sterling remained in focus this morning as an overwhelming tide of data hit the newswires. Unemployment was down once again, but the modest rise in wages and no change in the Monetary Policy Committee voting patterns meant that the pound could not hold on to $1.63 against the dollar.
US indices are looking more confident heading into the Fed meeting, as the US dollar sees some modest selling on expectations that the Fed meeting won’t see the ‘considerable time’ reference eliminated from the statement. Arguably this leaves the market as complacent about US interest rates as it was two weeks ago, but it will mean that equity indices should recover some of the upward momentum that has been lacking in recent sessions.
Ahead of the open, we expect the Dow to start 12 points higher at 17,143.