Risk is off this morning in the face of a potential US government shut down. Republicans have so far refused to pass the budget and will seemingly only agree on funding for the government based on a one-year delay in President Obama’s healthcare act. Congress has until midnight tonight to agree or shutdown will ensue and although essential services will continue operating many federal agencies will temporarily close down. There are also concerns for parties not agreeing on terms to raise the US debt ceiling. We are seeing a flight to safe haven assets as a result, not helped by political instability within Europe. Share indices in Asia have suffered, emerging market currencies and commodity currencies have fallen, but the pound has actually performed strongly vs. the US dollar. It pushed to a high of 1.6172 early this morning, supported too by some strong house price data released overnight, and trades at 1.6135 currently. All eyes in the market will be on Capitol Hill today and the ongoing negotiations or stalemate between Republicans and Democrats. Meanwhile we do have some mortgage data on the way from the UK. We expect a range today in the GBP/USD rate of 1.6090 to 1.6180
Posted on: Mon, 30 Sep 2013 09:13:38 +0000
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