Sterling gains slight support ahead of vote

Today's Highlights

Sterling gains slight support ahead of vote

US interest rate decision awaits USD

FX Market Overview

It's the last day of campaigning before the Scottish referendum. So if you believe the Yes campaign, Friday could be the start of lower taxes, more public spending, gold slippers for all and your tea delivered to your bedroom in the morning in your favourite cup by your local MP. If you believe the No campaign, a yes vote will involve years of depression, higher taxes, lower public spending and a sad downward spiral. Neither is entirely accurate but the next few years are going to be tough for Scottish, English, Irish and Welsh taxpayers no matter which way the vote goes.

The markets know that and this is why the Pound has been looking a bit sorry for itself of late. However, Sterling has bounced back to within a cent of the top of its range against the Euro and has gained a couple of cents against the US Dollar in the last few days. This morning's release of the minutes from the last Bank of England meeting will be interesting. You'll remember that two members of the MPC voted for an interest rate hike; the discussion around that will make for interesting reading. We also get the UK unemployment figures today and another fall in the claimant count of 30,000 or so is forecast.

This morning also brings Eurozone inflation data which ought to reflect a 0.3% annualised rate. The euro is likely to be unmoved by the news. The fact that French President, Francois Hollande survived a vote of no confidence by just 25 votes and failed to gain an overall majority seems to have been ignored by the markets.

We heard overnight that the New Zealand Current Account deficit narrowed last month but less than had been forecast. The Kiwi Dollar weakened on the news and will remain weak until this evening's release of the latest economic growth data which is forecast to be weaker than previous.

This afternoon's US data includes inflation, the current account balance and the Federal Reserve's interest rate setting meeting. No change is expected from the Fed but the discussion will include views on the date and size of the first post-recession interest rate hike. That's where the markets will perk up and the US Dollar has the propensity to strengthen if that date is sooner than expected.

And in Kentucky, Panayiotis Zavos is hoping to avoid jail after admitting his company was selling fraudulent fertility kits. Far from being 'approved by the food and drug administration' as they claimed, the kits were absolutely useless. This is the same man who claimed he was cloning humans though, so if they're going to jail him, they had better check they've got the right one.