Trade in the pound was mixed yesterday, but the currency ultimately closed the session higher thanks to mounting Brexit optimism.
Sterling remains rangebound this morning, with GBP/EUR muted at €1.1110, GBP/USD steady at $1.2234, and GBP/CAD flat at C$1.6289. Both GBP/AUD and GBP/NZD have edged lower, striking AU$1.8139 and NZ$1.9367 respectively.
High-level trade talks between the US and China are set to dominate markets today and could spark US dollar volatility.
What’s been happening?
After falling sharply at the start of the week, the pound nursed its wounds on Wednesday as Brexit uncertainty returned to wear down Sterling.
With talks between the UK and EU on the brink of collapse, GBP investors are now contemplating the next step.
Most analysts agree that another Article 50 extension is the most likely outcome. However, no-deal remains on the table, with concerns that Prime Minister Boris Johnson may try to circumvent the Benn act limiting any upside in Sterling.
The US dollar also remained range bound during the European session yesterday, with USD investors reluctant to alter their position amid heightened US-China trade uncertainty.
Meanwhile, the euro was able to exploit a mid-week lull in other major currencies despite European Central Bank (ECB) Vice President Luis De Guindos hinting at rate cuts.
What’s coming up?
All eyes will focus on Washington today and the highly anticipated trade talks between the US and China. While China seems open to a partial trade deal, analysts expect the meeting to be a tense affair.
Washington will likely overshadow the latest US CPI figures for September, which might otherwise offer a modest uplift to the US dollar if inflation rose in line with expectations.
Momentarily drawing attention away from Brexit this morning, the UK’s latest GDP figures are forecast to show growth stagnating in August which could exert additional pressure on the pound.
EUR investors will be looking to the ECB’s September policy meeting, which could shed more light on the bank’s decision to introduce fresh stimulus into the Eurozone.
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)