Supreme court verdict fuels pound recovery as prorogation ruled unlawful

• Pound rallies, parliament set to reconvene

• Surprise consumer confidence decline weighs on US dollar

• Euro falters as German business sentiment weakens

 
Pound gains, but GBP vulnerable to retail sales decline
 
The supreme court’s ruling that the proroguing of parliament was unlawful encouraged the pound to push higher across the board yesterday.
 
With parliament set to reconvene today markets are hopeful of the potential to make Brexit progress, in spite of lingering political uncertainty.
 
However, the mood towards the pound could sour this morning if the CBI reported retail sales index remains firmly planted in negative territory.
 
Fresh evidence of a decline within the retail sector may exacerbate worries over the health of the UK economy, leaving GBP exchange rates vulnerable to renewed selling pressure.
 
 
US dollar looks for support on home sales rebound
 
An unexpected decline in September’s consumer confidence index left the US dollar on a weaker footing yesterday.
 
With the Richmond Fed manufacturing index also showing a decline on the month investors saw little cause for confidence in the economic outlook.
 
USD exchange rates may find a rallying point, however, if August’s new home sales figures improve on the month as forecast.
 
As investors expect to see sales rebound from the previous month’s sharp decline worries over the health of the domestic housing market may ease and benefit the US dollar.
 
 
Weakening German business outlook drags on euro
 
The German IFO business expectations index saw an unexpected deterioration in September, dropping from 91.3 to 90.8.
 
This surprise decline suggests that German businesses are still taking a cautious outlook in the face of slowing economic momentum.
 
With investors concerned by the possibility of the Eurozone’s powerhouse economy slipping into a state of recession the strength of the euro naturally diminished.
 
However, fresh commentary from European Central Bank (ECB) policymakers may help to shore up the single currency if it proves encouraging.