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Cummins Quits Inner Circle

Wednesday 11 November, 2020

Daily Currency Update

GBP - British poundSterling declined yesterday, dropping towards the 1.31 handle against US Dollar and tested the 1.11 handle against the Euro. Given the current strict lockdown measures currently in place in the UK it is no surprise the currency is having some bad days. Coupled with the fact that Brexit talks are continually being extended with no real signs of any progress.Third quarter GDP and industrial production numbers were weaker than expected and we find ourselves in a rather inevitable position with Sterling on the backfoot. Next week is an important week for the UK and the Covid-19 pandemic. If the number of daily cases and deaths does not start to dip, due to the nationwide lockdown, we could see Sterling come under more pressure. Dominic Cummings resigned this morning which makes him the second person in BJ’s inner circle to do so in as many days. This will also weigh on the pound as it throws the prime minister’s entire political project into doubt, proving rumours around increased tensions in the inner circle.

Key Movers

There has been a slight shift in financial markets since Monday’s positive news from Pfizer regarding the success of the vaccine. Now the real question is around how long it will take to distribute this vaccine and with US Covid-19 cases breaking 200,000 a day, it certainly needs to be sooner rather than later. Optimism is certainly dipping from the start of the week, Fed Chair Powell has come forward and said congress and the Fed will have to do more, but what that looks like remains to be seen.Despite significantly weaker German industrial production, the continued virus outbreak and German Chancellor Merkel’s warning that the current restriction will be in place until December, the Euro remained remarkably resilient. Anti-dollar flows is the only explanation because the outlook for the Eurozone is grim.

Expected Ranges

  • GBP/USD: 1.2995 - 1.3205 ▼
  • GBP/EUR: 1.1090 - 1.1185 ▼
  • GBP/AUD: 1.8095 - 1.8250 ▼
  • EUR/USD: 1.1750 - 1.1905 ▲