rates table

EU rejection leak hurts the Pound

8th October 2019 Market Update

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🇬🇧 GBP –  Sterling had a tough start to the week as it fell throughout Monday’s morning session against the Euro and US Dollar. This was attributed to markets growing concern that a deal remains a long way off in negotiations between the UK and the EU. Markets had largely priced in an extension or a deal being agreed but are beginning to adjust according to the increasing risk of a no deal Brexit. There was no data to support the Pound, but it did manage to claw back some of the losses in the afternoon.
However, the Pound has had a poor start to the morning in reaction to the leaking of the EU’s point-by-point rejection of the Johnson proposal. Today again sees an empty economic calendar as Carney’s speech is unrelated to currency markets. This will leave political risk as the sole focus and as a result, Sterling is vulnerable to further falls.

🇪🇺 EUR – The Euro gained against the Pound but lost ground versus the US Dollar yesterday following further weak data from the Continent’s biggest economy. German Factory Orders were again in negative territory and worse than expected which will add to the concerns of analysts regarding the impact on the wider European economy.
Individual nations will publish an array of data today that will have a limited impact on the exchange rates. German Industrial Production will be the most watched for the same reasons as above but overall the single currency is likely to be rangebound.

🇺🇸 USD –  The US Dollar was largely unchanged against its major pairs yesterday as traders await bigger events later in the week. However, stumbling blocks have already been put in place as China is reportedly reluctant to agree to a broad trade deal. Trade war concerns seem to be affecting other currencies, such as the Australian Dollar, rather than the US Dollar which remained resilient yesterday.
It’s likely to be another quiet day for the US Dollar today with only low importance Producer Price Index and Redbook Index results being published. Markets will be more interested in waiting to see what the FOMC Minutes say on Wednesday evening.

 

Summary:

GBP: Sterling falls on increasing Brexit risk
EUR: Poor data from Germany adds to economic concerns
USD: Quiet day expected ahead of FOMC Minutes tomorrow


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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