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Sterling has best week since May

6th September 2019 Market Update

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🇬🇧 GBP –  Sterling posted its best 2-day surge in 10 months, as the no-deal fears of Brexit appear to be fading in the short term. Although the prime minister is expected to try and seek an election for October again next week, the Labour party’s stance is to not back a general election until the risk of no-deal is off the table. Due to the Fixed-term Parliaments Act though, it is unlikely that there will a general election without Labour’s support. The Labour party adopting this position could undermine them, with Boris Johnson declaring that the Labour party was supporting a “surrender bill” by extending the date Brexit date past 31st October. There is no data of note today from the UK today, although any political developments could impact sterling.

🇪🇺 EUR – The euro remains under pressure, as Germany’s export-dependent manufacturing sector has been effected by the trade war. However, as trade talks seem to have resumed between the US and China, the euro has marginally strengthened the past couple of days against the dollar. Factory orders had shrunk yesterday in Germany, coming in at -2.7%, reflecting the global slow down.

🇺🇸 USD –  Yesterday afternoon ADP non-farm employment change was above expectations, strengthening the US dollar. This acts as a precursor to non-farm employment change this afternoon, which is expected by the market to be roughly be inline with last month’s reading. The S&P 500 hit a one month high yesterday, following hopes that China and the US could potentially resume trade negotiations next month.

 

Summary:

GBP: Sterling rises as no deal risk reduced
EUR: Euro marginally strengthens, despite weaker factory orders in Germany
USD: The S&P 500 rises to one month high following hope that trade talks between China and US will resume


 

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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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