Risks Still Tilt to Downside for Sterling, Says Saxo's Hardy

The video discusses the foreign exchange market's reaction to political events, particularly Brexit. John Hardy from Saxo Bank explains how algorithms initially reacted to the possibility of a second referendum, causing a temporary rise in the pound. The discussion covers the complexities of Brexit, including Theresa May's deal and the potential for a general election, which could lead to a Corbyn administration. The market's nervousness about these outcomes is highlighted, with risks still perceived to be on the downside for sterling.

What was the initial reaction of the FX market to the possibility of a second referendum?

• The market remained stable.

• The euro strengthened against the pound.

• The pound experienced a temporary rally.

• The pound dropped significantly.

What are the two potential outcomes if Theresa May's deal is not backed by MPs?

• A new trade deal or a no-deal Brexit.

• A second referendum or a general election.

• A hard Brexit or a soft Brexit.

• A currency devaluation or a market rally.

What has contributed to the recent drop in sterling?

• Increased interest rates.

• A strong euro performance.

• The possibility of a Corbyn administration.

• A successful Brexit deal.

What is one of the main challenges in achieving a soft Brexit?

• The strength of the euro.

• The momentum of the Brexit party.

• The stability of the pound.

• The lack of public support.

What might encourage some Labour Remainers to support Theresa May's deal?

• The fear of a hard Brexit.

• The promise of a new trade agreement.

• The prospect of a general election.

• The potential for a currency devaluation.