The odds of an imminent Brexit deal continued to fluctuate sharply yesterday, leading to another day of pound volatility.
- Pound slumps amid fears Brexit talks are breaking down
- US dollar benefits from rising US-China trade tensions
- Weak food price index set to drag New Zealand dollar lower
Reports Brexit negotiations are close to collapse keep the pound under pressure
GBP exchange rates plunged sharply yesterday amid reports that Brexit negotiations are on the brink of collapse.
With the two sides at deadlock over the issue of the Irish border, the risk of no deal being agreed before the current October deadline increased sharply.
This could keep the pound on a weaker footing today as markets continue to assess the likelihood of the UK crashing out of the EU without a deal.
Unless Boris Johnson’s government looks set to request an extension to the Brexit deadline a sense of political anxiety looks set to keep GBP exchange rates under pressure.
Fed meeting minutes forecast to dent US dollar
Fears that this week’s US-China trade talks may not yield a breakthrough helped to shore up the US dollar yesterday.
Elevated safe-haven demand offset the impact of underwhelming US data, with small business optimism and producer prices both falling short of forecast.
However, the mood towards the US dollar could sour this evening with the release of the Federal Open Market Committee’s (FOMC) latest set of meeting minutes.
With markets already betting on the prospect of another imminent interest rate cut, any dovish signals in the minutes look set to weigh on USD exchange rates.
New Zealand dollar shrugs off global trade worries
Mounting worries over the global trade outlook were not enough to drag the New Zealand dollar lower on Tuesday.
Risk appetite diminished but NZD exchange rates were able to capitalise on the relative weakness of many of the majors.
The New Zealand dollar looks vulnerable ahead of tonight’s food price index report however as investors look for fresh signs of weakening inflationary pressure.
A fresh decline in food prices would give the Reserve Bank of New Zealand (RBNZ) further incentive to cut interest rates in the months ahead, leaving NZD exchange rates biased to the downside.
Wednesday, 9th October 2019
19:00 USD Federal Open Market Committee Meeting Minutes
22:45 NZD Food Price Index
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)