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FX round-up: Sterling ends mixed after second Scotland independence vote worries abate

By Andrew Schonberg

Date: Monday 27 Feb 2017

FX round-up: Sterling ends mixed after second Scotland independence vote worries abate

(ShareCast News) - Sterling put in a mixed turn on key crosses Monday with this morning's weakness versus the US dollar recouped after worries about a second Scottish independence referendum stoked in the weekend press abated.
At 17:29 GMT, sterling was up 0.02% to $1.2465, and down 0.51% to €1.1737. The dollar-spot index fell 0.3% to $100.790.

Weekend reports that Scotland may call another divorce vote after the UK has quit the EU saw an early sterling sell-off, perhaps exacerbated by a dearth of UK economic news until later this week.

"It is ... strange that traders have all of a sudden become spooked by something that has always been a concern, and is likely to continue to be so," said Michael Hewson, chief market analyst at CMC Markets UK.

"This speculation about another referendum is unlikely to ever go away, whatever the circumstances," he added.

Sterling was also down on the aussie, kiwi and rand, but rose on the loonie and yen. While the euro slipped on sterling and the dollar, the single currency was up 0.44% to 1.0610 in its cross versus the US dollar.

"After the euro's morning surge thanks to a decent region-wide consumer confidence figure and the subsequent suppression of interest in the DAX and CAC, nothing really shifted as the day went on," said Spreadex financial analyst Connor Campbell.

On the data front, the European Central Bank's M3 money supply data fell to an annualised pace of 4.9% in January, from 5% a month earlier (consensus: 4.8%).

The annual growth in household loans grew to 2.2% in January up from 2.0% in December. Loans to non-financial businesses were unchanged at 2.3% in January, a seven-year high.

The European Commission's economic sentiment index for the Eurozone rose to 108 in February from 107.9 last month, well above the long-term average of 100.

The market remains altogether cautious about the political landscapes in France and Italy, particularly so in the face of the Greece debt saga and UK's Brexit ambitions.

Finally, the greenback was another major currency trading mixed on Monday, with the market unsure about the timing of possible US Fed Reserve interest-rate hikes, and ahead of US President Donald Trump's speech to Congress on Tuesday.

"The US dollar has had a mixed day as uncertainty over what may come out of tomorrow's speech keeps investors on the back foot," said Hewson.

"The prospect of any sort tax reform has receded after President Trump admitted that he couldn't look at that until an Obamacare replacement plan had been sketched out," he added.

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