After soaring in response to the Conservative’s decisive election victory the pound quickly began shedding ground through Friday’s session.
- Pound bounces back as odds of Brexit deal rise
- Canadian dollar shakes off election jitters
- Hopes of US-China trade progress weigh on US dollar
Higher odds of Brexit deal fuel pound gains
While Boris Johnson’s Brexit plan failed to get over the finish line on Saturday the pound still found cause for confidence at the start of the week.
With markets seeing increasing odds of Johnson’s plan securing sufficient support from MPs the risk of a no-deal scenario fell.
However, if the deal fails to gain parliamentary approval GBP exchange rates could decline sharply in the days ahead.
Canadian dollar losses forecast on retail sales decline
Growing anticipation ahead of the federal election was not enough to prevent the Canadian dollar trending higher on Monday.
As market risk appetite generally improved thanks to hopes that US-China trade relations are thawing, CAD exchange rates found fresh support.
Worries about the Canadian economic outlook could grow this afternoon if August’s retail sales data points towards weakening consumer sentiment.
Signs of manufacturing weakness to drag on US dollar
Positive signals from US and Chinese officials inspired hopes for a trade agreement.
While this would offer some relief to the US economy, which has shown signs of weakening in the face of trade tensions, demand for the US dollar still diminished as risk appetite rose.
USD exchange rates could shed further ground if October’s Richmond Fed manufacturing index falls deeper into negative territory.
With forecasts pointing towards a decline from -9 to -14, highlighting another lacklustre month of activity, support for the US dollar looks set to diminish further.
Tuesday, 22nd October 2019
11:00 GBP CBI Business Optimism Index
13:30 CAD Retail Sales
15:00 USD Richmond Fed Manufacturing 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)