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Brexit talks hinder the Pound

Daily Currency Update

GBP - British PoundSterling gains were halted yesterday as Brexit talks hit some stumbling blocks. Negotiations have not gone as planned this. Discussions between the bloc and Tory leaders fizzled out during the fourth round of negotiations. Mr Barnier reiterated there would be no deal unless the UK accepted a “level playing field” on trade and access to British fishing waters. However, sentiment around these talks remain positive with both parties now sketching out an agreement as we inch closer to the end of year deadline to avoid a no deal. GBP/EUR has maintained its recent push towards 1.1100. US data has hindered Sterling’s gains against the US dollar as employment data beat expectation on Thursday. Despite early indicators suggesting that payrolls could see fewer numbers than anticipated, they rose 4.8 million which was well above the 3.23 million consensus. GBP/USD rose to 1.2524 in the build up to the release but was quickly sold down to 1.2460 on the news. This is where the currency pair currently sits.Shortly we are expecting final services PMI data from the UK, which will be the main driver for Sterling today. A 47.0 forecast has been predicted, which is a vast improvement from June’s 29.0 and closer to the 50 expansion figure. If forecast is met or exceeded, Sterling could bounce higher.

Key Movers

As briefly mentioned, the US dollar fought back recent losses against a number of currencies yesterday as jobs data came in better than expected. Alongside payroll numbers (4.8mio versus 3.23mio forecast), the unemployment rate dropped from 13.3% in June to 11.1%. News that further supports the V-shaped economic recovery that some have predicted we would see as we recover from the COVID-19 pandemic. EUR/USD fell to a low of 1.1224 on the news, USD/CAD to 1.3551 and the antipodean currencies also lost ground. Headwinds still remains for the US dollar as data aside, the recent jump in local virus cases could force the government to lockdown again on the second wave.

Expected Ranges

  • GBP/EUR: 1.1050 - 1.1110 ▼
  • GBP/AUD: 1.7880 - 1.8010 ▼
  • GBP/NZD: 1.9010 - 1.9170 ▼
  • GBP/CAD: 1.6830 - 1.6960 ▼