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UK Pound higher on BREXIT DAY

Today is Brexit day – at 11pm tonight London time the UK leaves the EU after 3 ½ years of negotiations and political uncertainty. The UK pound is trading higher, but traders now await EU/UK trade negotiations scheduled to begin on March 3. The dollar edged lower even as the coronavirus spreads. Global equities are lower -- the S&P is opening lower by 0.44% -- and rotation into bonds has brought the US Treasury 10-year yield down to 1.55%. US economic data released this morning basically met expectations.

“The most luxurious possession, the richest treasure anybody has, is his personal dignity."
Jackie Robinson, the first African-American to play major league baseball
  • FX Rates
    January 31, 2020

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    The dollar index is slightly lower even as the coronavirus spreads, more recently into the UK and Russia. The World Health Organization declared the outbreak a global health emergency – cases have soared to nearly 10,000 globally. US economic data released this morning basically met expectations. Traders are in risk-off mode as they digest a bombardment of information – corporate earnings, central-bank decisions, economic data and virus news.

    GBP

    The UK pound is higher on Brexit Day, when the UK officially leaves the EU. Currency traders are reacting positively to yesterday’s BoE decision to hold rates steady. Reports show that corporate buying and month-end flows are supporting the currency.

    EUR

    The euro edged higher despite news that more eurozone economies continue to struggle. The French economy, the second largest in the eurozone, contracted by 0.1% in Q4; and French consumer spending and inflation also continued to decline. The eurozone is much more vulnerable to reduced global trade than is the US.

    CAD

    The Canadian dollar continues to weaken, reaching a seven-week low versus the US dollar. It did manage to move off its lows on this morning’s news that Canada’s economy unexpectedly grew by  0.1% in November. Traders must wait until March 4 for the next BoC meeting to see if a rate cut is in order.

    ASIA/PACIFIC

    Asian equities and currencies are under fire. More than a dozen Chinese provinces announced that they will remain shut next week, and according to Bloomberg calculations, they represent almost 69% of China’s GDP. The disruption to regional and global trade has economists expecting the coronavirus will hurt China’s economy over the near term more than the effect of the SARS virus in 2003.

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For more analysis on FX markets or information regarding SVB's FX services:

Contact your respective SVB FX Advisor or the SVB FX Advisory Team at fxadvisors@svb.com.
See all of SVB's latest FX information and commentary at www.svb.com/foreign-exchange

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About the Author

Scott Petruska is Chief Currency Strategist and senior advisor for Silicon Valley Bank’s global financial services group, and is based in Boston, MA. He advises clients on currency and interest rate hedging strategies, and helps them with other aspects of global banking. He regularly writes blogs on topics covering the global financial markets, conducts client seminars and webinars, and speaks at regional financial conferences.

Petruska has more than 30 years experience in the currency and interest rate markets, and has lived and worked in Boston, Chicago, New York City, Singapore and Tokyo. Prior to joining SVB in 2009, he worked at several large international financial institutions, including National Westminster Bank, Irving Trust, Bank of New York, State Street Bank and Commerce Bank. He has been an institutional trader, product developer, analyst, salesperson and advisor.

Petruska has been awarded several professional designations, including the CFA (Chartered Financial Analyst), FRM (Financial Risk Manager) and CMT (Certified Market Technician). He earned his undergraduate degree in Finance & Banking from the University of Wisconsin.

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