Pound thrown a life line from Parliament
Friday 19 July, 2019
Daily Currency UpdateGBP - British PoundBoris Johnson suffered his first defeat in Parliament yesterday before even becoming Prime Minister as the House of Commons voted to stop the incoming government proroguing parliament. This move shows that battle lines have already been drawn and there is a sense at Westminster that Parliament won't back down in the face of Johnson or a no-deal. The pound took some comfort from this alongside comments from Michael Barnier that he was ready to work on alternative to the divisive Irish backstop issue that turned out to be May's achilles heel. It's a quiet day across the market today with little tier 1 releases and next week will be the same for sterling however the market instead will be focused on the events of Monday night/Tuesday morning when the Tory party is expected to announce its new leader.
Key MoversIt was a rough day for the US dollar yesterday as it lost ground against a raft of its peers as investors try to figure out if a 50 basis point cut will be on the cards at the end of the month rather than a 25 basis point cut. Next week this speculation should only increase and ahead of the pre-Fed meeting media ban.For the Euro yesterday the main news came from a story that the ECB governing council have begun an informal analysis of the way it targets inflation. Thanks to the Reserve Bank of New Zealand 25 years ago central banks globally now target inflation at 2% so it will be interesting to see what comes out of the ECBs analysis. The story saw the Euro weaken off against the dollar yesterday but if the target for inflation is lowered then it follows that the barrier to monetary tightening is also lower as well. Alternatively, the ECB could tolerate inflation running away in a bid to kick start growth.Finally, spare a thought for the Canadian dollar yesterday as oil prices dropped to a one month low and the Loonie was the only currency not to strengthen against the US Dollar. However it's been a volatile few days for oil and with the US Navy confirming they destroyed an Iranian drone in the Strait of Hormuz prices have climbed 2% once again.
- GBP/USD: 1.2390 - 1.2550 ▲
- GBP/EUR: 1.1060 - 1.1140 ▲
- GBP/AUD: 1.7670 - 1.7760 ▲
- GBP/NZD: 1.8440 - 1.8530 ▼
- GBP/CAD: 1.6190 - 1.6350 ▲