GBP/EUR rocked by contradictory Brexit headlines
Philip McHugh October 2nd 2020 - 2 minute read
The pound was all over the place on Thursday as GBP investors were kept on their toes by a plethora of Brexit headlines.
Sterling looks to be edging higher this morning, with GBP/EUR rising at €1.1019 and GBP/USD stable at $1.2916. GBP/CAD is gaining at C$1.7168, while GBP/AUD and GBP/NZD are strengthening at AU$1.8022 and NZ$1.9432, respectively.
Coming up today, while markets react to news Donald Trump tested positive to coronavirus, the latest US payroll figures will likely drive movement. Will a solid rise in employment growth last month offer support to the US dollar?
What’s been happening?
The pound was up and down like a yo-yo yesterday as the currency was rocked by a glut of Brexit developments.
This was kicked off by a sharp plunge in Sterling after the European Commission President, Ursula von der Leyen, formally announced that the EU had launched legal action against the UK for breaching the Withdrawal Agreement with its Internal Market Bill.
GBP exchange rates then rebounded at midday after the Financial Times reported the UK and EU were close to a deal, but this recovery proved short lived, after an EU official appeared to refute these claims later in the afternoon.
The US dollar, meanwhile, faced some modest selling pressure on Thursday as improving market sentiment and an underwhelming ISM manufacturing PMI dampened the appeal of the ‘Greenback’.
This drop in the US dollar offered some limited support to the euro yesterday thanks to the negative correlation between the pairing, although the upside in the single currency was capped as the Eurozone reported another rise in unemployment through August.
What’s coming up?
Top of the agenda today will be the reaction to Donald Trump testing positive for coronavirus as markets sink at the start of trading, while the latest US non-farm payroll figures will also drive movement this afternoon.
The highly influential release is currently expected to show the US economy added 850,000 jobs last month. But could a larger-than-expected drop in the unemployment rate help to strengthen the US dollar later this afternoon.
In the Eurozone all eyes will be on the bloc’s consumer price index, with the euro poised to tumble if they confirm the Eurozone suffered another month of deflation in September.
For GBP investors, the focus is likely to remain on Brexit, with the currency vulnerable to more volatility depending on developments.
Written by
Philip McHugh