There is more of a cautious sentiment that is taking hold this morning. The US is on public holiday for Martin Luther King Day, but the safe haven plays are in favour as the yen and gold are pushing higher. These cautious markets are coming as the sterling is under pressure once more as the prospect of a hard Brexit has spooked the market. UK Prime Minister Theresa May is making a speech tomorrow which is expected to lay out expectation for a “hard Brexit”. Any time this term is banded around, sterling gets hit and subsequently the pound is hitting lows not seen since the flash crash of early October. Equity markets are also in cautious mode with this, although with the weakness of sterling, FTSE 100 is set to outperform due to its negative correlation with sterling (around 70% of FTSE 100 revenues are generated in foreign currency).
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