The pound surged overnight, hitting a three-year high against the euro and an over one-year high against the US dollar.
- Likely extension of Brexit deadline undermines pound
- Euro slips as Eurozone consumer confidence slumps
- Modest house price increase shores up US dollar
Rising odds of general election weigh on pound
With Boris Johnson’s proposed Brexit withdrawal agreement on ‘pause’ the odds of a fresh delay to the Brexit deadline increased.
This left the pound on a generally weaker footing as markets remain concerned by the negative impact the prolonged uncertainty is already having on the UK economy.
If the EU approves a fresh extension of the October deadline GBP exchange rates may shed further ground, particularly if the odds of a general election continue to rise.
Further euro weakness forecast, ECB decision ahead
The euro came under fresh pressure yesterday as the Eurozone consumer confidence index slipped deeper into negative territory.
With the index unexpectedly sliding from -6.5 to -7.6 this highlighted the increasing sense of anxiety within the currency union, pointing towards a continued loss of economic momentum.
If the European Central Bank (ECB) adopts a less dovish tone at its October policy meeting the mood towards the euro could improve, but any hints that further stimulus is on the way would be EUR negative.
Durable goods orders decline set to drag on US dollar
A modest improvement in August’s house price index offered some support to the US dollar yesterday, as did easing risk appetite.
Confidence in the outlook of the US economy could take a hit this afternoon however as forecasts point towards a sharp dip in durable goods orders.
If orders fall -0.8% on the month, as expected, this would offer fresh evidence of a deterioration in US consumer sentiment and add to existing growth worries.
With the Federal Reserve already looking set to cut interest rates before the end of the month another underwhelming piece of data would leave the US dollar lacking support.
Thursday, 24th October 2019
09:30 GBP BBA Mortgage Approvals
12:45 EUR European Central Bank Rate Decision
13:30 USD Durable Goods Orders
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)