GBPUSD continues its slide:
The pound fell heavily for the second consecutive day, hitting levels lower than those we saw just after the Brexit vote. GBPUSD fell 130 pips (1.0%) on Monday then another 114 pips (0.9%) on Tuesday, printing a new low of 1.2682, the lowest level since 1985. The move caused GBPUSD one month implied volatilities (a measure used by options traders to measure risks through option prices) to jump from 8.6% on Friday to 10.2% on Tuesday. We still have some way to go to beat the lows of 1.0520 seen in 1985.
The FTSE 100, dominated by multinationals advanced 1.3% to 7074 on Tuesday, close to all-time highs seen in April 2015 of 7122. The world’s biggest education company Pearson (802.50p +5.17%) gained after an upgrade by Morgan Stanley. Precious metals miner Randgold fell more than 5% (7330p -5.9%) as Gold prices moved sharply lower to levels not seen since Britain’s Brexit vote.
European shares gained, with Deutsche Bank (€11.74 +1.51%) hitting a 2-week high, with fears over the bank’s solvency seemingly overdone. UniCredit closed lower (€2.01 -1.08%), announcing it will wait until after Italy’s referendum before deciding on a buyer for its asset manager.
In the US, Apple displayed relative strength ($113.00 +0.43%). Conversely Wells Fargo ($43.75 -0.18%) slid after reports indicated that fraudulent account activity may have impacted small business owners in addition to consumer banking customers.
With trade at the top of the agenda, expectations for a smooth running G7 Summit were low even before the meeting started. A