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GBP/USD refreshes 2020 low on Brexit fears

currency-newsGBP/USD refreshes 2020 low on Brexit fears
The pound ticked lower on Thursday, with GBP investors growing increasingly jittery over Brexit following Boris Johnson’s hard line stance in a speech earlier this week.

Sterling appears to have stabilised this morning however, with GBP/EUR steady at €1.1791 and GBP/USD flat at $1.2932. GBP/CAD is stable at C$1.7206, while GBP/AUD and GBP/NZD have both ticked higher, striking AU$1.9301 and NZ$2.0097 respectively.

Looking ahead, the focus today will undoubtedly be on the latest US payroll figures. Will a bumper payroll reading in January send the US dollar higher today?

What’s been happening?

The pound trended lower through yesterday’s session in response to lingering Brexit uncertainty.

Earlier this week Boris Johnson struck a bullish tone as he outlined his vision for a free trade deal with the EU, reiterating his stance that the UK should not have to abide by EU rules to secure such a deal.

This has put significant pressure on Sterling sentiment as markets fear it will increase the risk of the UK failing to secure a deal with the EU, resulting in a no-deal Brexit at the end of 2020.

The euro also came under pressure on Thursday, as EUR investors were dismayed by data from Germany showing a surprisingly sharp contraction in factory orders in December.

At the same time, the US dollar firmed on Thursday, touching a 2020 high in response to China’s announcement it would slash tariffs against hundreds of US exports as well as optimism ahead of today’s US payroll report.

What’s coming up?

In the spotlight today will be the publication of the highly influential US non-farm payroll report.

The current market consensus is for US payrolls to see a modest rise from 145,000 to 160,000 in January.

However, in light of Wednesday’s impressive ADP employment report there are hopes for a bumper reading to send the US dollar sharply higher today.

Meanwhile, the euro looks set to struggle today after Germany’s latest industrial production figures confirmed Europe’s manufacturing powerhouse remained in second gear through the end of 2019.

Finally, the continued absence of any notable data is likely to keep GDP investors focused on Brexit through to the end of this week’s session, likely limiting any upside in the pound.
Philip McHugh

Philip McHugh

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)

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