FX Update: The pound saw big volatility
FX Update: The pound saw big volatility after Hollande signalled that the EU will be a tough stance at upcoming Brexit negotiations. Cable dove precipitously, making a low of 1.1841 on EBS before rebounding to 1.2483 and then settling around 1.2450, which is still a net loss of 1.2% on the day. The notoriously thin sterling market in Asia both contributed to and exacerbated volatility. Analysts expect trading to remain choppy in Europe, but with a sell-into-rebounds bias with tough Brexit negotiation stances of both the EU and UK having come into sharp form this week. Elsewhere, the euro fell to a five-week low versus the dollar, at 1.1110, after ECB's Constancio said, according to an MNI report, that the council had not discussed QE, let alone reached a consensus on tapering, contrary to the Bloomberg report of earlier in the week. Constancio stressed that QE will go on until inflation is back on target. The yen has traded firmer today by varying degrees, sharply in the case of GBP-JPY, but only modestly in the case of USD-JPY and AUD-JPY. This follows a near two-week period of underperformance following the BoJ's overhaul of its policy framework.