The Sterling tumbles sharply as the week starts on increasing uncertainty over Scotland's independence. According to a YouGov poll released on Sunday, support for independence of Scotland jumped again to 51% and surpassed the anti-exit camp for the time since the referendum campaign begins. Economists noted that the chance of independence creates a great amount of political and economic uncertainties which would at least continue to pressure the pound until the vote on September 18. In particular, UK chancellor of exchequer Osborne said over that weekend that a plan of actions will be announced in the next few days to "give more powers to Scotland; more tax powers, more spending powers, more powers over the welfare state." And, major focus will be on whether such measures could turn the tide.
Technically, the GBP/USD took out 1.6251 support zone and is heading to next fibonacci level of 1.6002. The EUR/GBP recovers strongly today too but is staying in range of 0.7873/8035. The EUR/GBP could stay directionless for a while as Euro is itself still feeling the pressure from last week's surprised easing from ECB. The GBP/JPY is having its sight of 169.53 key support level and decisive break there will turn medium term outlook bearish. The GBP/CAD continues to head towards 38.2% retracement of 1.5424 to 1.8666 at 1.7428. The GBP/AUD is heading to 100% projection of 1.9185 to 1.7735 from 1.8374 at 1.6924.
On the data front, Japan Q2 GDP was revised down to -1.8% qoq while GDP deflator was unchanged at 2.0% yoy. New Zealand manufacturing activity dropped -1.9% in Q2. Swiss data will be a focus in European session as unemployment and CPI will be released. Eurozone will release Sentix investor confidence and German trade balance. Canada will release building permits.
Looking ahead, the economic calendar isn't too busy this week. New from UK regarding Scotland referendum will be the main focus. RBNZ will meet and would stand pat of rates. Australia employment data, US retail sales, and China inflation will also be watched.
- Tuesday: Australia business confidence; UK production and trade balance
- Wednesday: UK inflation report hearings; US wholesale inventories
- Thursday: RBNZ rate decision; Australia employment; China inflation; US jobless claims
- Friday: Eurozone industrial production; US retail sales, U of Michigan sentiment