The British pound has posted slight gains in the Wednesday session, following strong gains on Tuesday. In North American trade, GBP/USD is trading at 1.3072, up 0.31% on the day. Earlier in the day, the pound touched a high of 1.3080, its highest level since August 4. On the release front, there are no events in the UK. Over in the US, ISM Non-Manufacturing PMI improved to 55.3, but fell short of the forecast of 55.8 points. On Thursday, the US releases employment claims.
One of the biggest losers in the Brexit saga will be the City of London, which stands to lose its status as the primary financial hub in Europe. There are plenty of players casting an eye on the spoils after Britain leaves the European Union. Frankfurt and Dublin are the two main contenders, with Paris and Amsterdam are also hoping to lure large financial companies. On Wednesday, Deutsche Bank chief executive John Cryan argued that Frankfurt is ideally suited to take over from London as the financial hub for European banks, saying it has the structures in place to take over from London. Analysts estimate that London could lose up to 30,000 jobs in the financial services sector, with clients moving up to 1.8 trillion euros in assets from the UK to the continent. Germany could gain 30% of these jobs, which would mark a huge post-Brexit boon for the country.
On Wednesday, Deutsche Bank chief executive John Cryan weighed in on the matter, calling on the ECB to alter course and stop providing "cheap money" to the markets. Cryan warned that the ECB’s monetary stance threatened to cause bubbles in the capital markets, including property, stocks and bonds. Cryan added that the stronger euro should not serve as an excuse for the ECB to continue its QE program. Turning to Brexit, Cryan argued that Frankfurt is ideally suited to take over from London as the financial hub for European banks. There is fierce jockeying in Europe as to who will take over from London, with Paris, Dublin and Amsterdam all hoping to pick up the spoils after Britain leaves the European Union and large financial companies bid adieu to London.
The ongoing crisis over North Korea and its neighbors continues to weigh on the US dollar. Gold and major currencies have benefited from the crisis, as nervous investors look for alternatives to the greenback. The week started with North Korea announcing that it had exploded a hydrogen bomb which could be fitted to an intercontinental ballistic missile. US President Trump responded by announcing that he would increase weapon sales to Japan and South Korea and on Wednesday, South Korea’s President Moon Jae-in warned that the situation risked becoming "uncontrollable". If tensions between North Korea and the US worsen, the US dollar could continue to lose ground.
