Pound looks to halt decline; FTSE treads water

After recent Brexit-related weakness the Pound is looking to recover today, with Sterling trading higher across the board. The FTSE 100 has had a quiet week after starting strongly higher with little movement seen in recent days. The index is flat on the day at the time of writing.

Calm before the storm

Implied volatility in the Pound against the Euro has been rising fairly strongly this week and currently sit at levels not seen since June as the will-they-won’t-they saga relating to Brexit talks progressing to the next stage rumbles on leaving traders on tenterhooks. Reports this morning that UK PM Theresa May has prepared another Brexit proposal to submit to Ireland in a bid to settle the border dispute have boosted sterling, but until there is official confirmation of a deal the pound’s gains will be capped. An EU summit that kicks off this time next week has been earmarked as an event where the Brexit talks can progress to trade negotiations, but this would likely require a resolution on the Irish border by tomorrow at the latest.

Bitcoin Juggernaut rolls on    

As far as financial markets are concerned 2017 will likely be remembered for the incredible rise in Bitcoin. Despite all-time highs in stock markets in the UK, US and throughout Europe, a failed power grab in British elections by PM May, a new wave of optimism in Europe following Macron’s victory, ongoing allegations surrounding US president Trump and his Russian links, an unconstitutional declaration of independence in Catalonia, an indecisive outcome from the German election, a re-election for Japanese PM Abe, a first rate hike in a decade from the BoE, an extension to the ECB’s QE programme and OPEC’s supply cuts and, last but not least, the passage through both houses of a GOP tax bill, Bitcoin has stolen the show.

The question now is whether the year will be seen as a Eureka moment when the masses finally woke up to the cryptocurrency revolution or whether it is looked back on as an example of one of the largest speculative bubbles of all-time. There are obviously a myriad of possibilities in between these two extremes but given the polarising nature of the debate as Bitcoin reaches yet another record high above $15000 this morning there is a growing sense that one of the two distinct camps will prove victorious and the other will be left looking - to put it mildly - very silly. Which will be which? Only time will tell.

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