Is That It Then? Is The Bottom Of The Market In?

27/06/16 -- Well, few saw the result of the referendum coming, certainly the currency market didn't with the pound flirting with 1.50 against the dollar on Thursday night.

We're now at 1.33, for a decline of 11% in a day and a half, and on out way to 1.20 by the end of the year if HSBC are to be believed.

Barclays are a bit less bearish at 1.24, but that's still nearly another 7% lower than where we are today.

The euro too is under pressure from the threat of the break-up of the bloc. Are the UK merely the first rat to desert the sinking ship? Who'd want to trade with an EU that excluded France and Germany as well for example, with more "less desirable" nations in the east still queuing up to enter a party that the celebs are already leaving?

The euro is down sharply versus the dollar, but still stands nearly 8% better against the pound since Thursday night.

Meanwhile Nov 16 London wheat ended 4.2% firmer Friday and has added another 2.5% so far this morning for a net gain of 6.7% over the day and a half since the result came out.

It seems then that London wheat may be more closely aligned to the STGEUR exchange rate than the STGUSD - and understandably so.

So what are the prospects for the former? According to Barclays 1.18 by the end of the year, not much different to little better than 1.20 right now. Others are more bearish on STGEUR, UniCredit for example forecasting 1.11 by the close of 2016, some 7.5% below today.

Add 7.5% to today's London wheat price and we get another GBP9.25/tonne of upside.

A weak sterling should also support export prices of meat and dairy produce, the vast majority of which goes to Europe, although it will also of course put up the price of feed.

So maybe it's not all doom and gloom today, at least not until after the England game....