Sterling slips ahead of Labour conference Brexit vote
Monday 23 September, 2019
Daily Currency UpdateGBP - British PoundAfter pushing as high as 1.2580 last week, GBP/USD is back to around 1.2460 at the moment as Brexit sentiment turns dovish once more. Last Thursday saw cable rally on encouraging words from EU Commissioner, Jean-Claude Juncker about the possibility of a Brexit deal being done however after hitting its highest level since mid-July the gains were undone as Irish Foreign Affairs Minister, Simon Coveney downplayed the chances saying there was still a "wide gap" between the two sides. GBP/EUR trades around 1.1335.This week is another crucial week for the pound with the Labour Party conference taking place in Brighton and the UK Supreme Court due to deliver its verdict on the legality on Boris Johnsons decision to prorogue Parliament. Labour party members are due to vote on its Brexit policy going forward later, with delegates due to choose between explicitly backing remain in a future election or remaining neutral until they have agreed a deal which would then be put to a public vote via another referendum. Many members of leader, Jeremy Corbyns own shadow cabinet are pushing for Remain to the be the parties default position however the subject has divided the party deeply, much like within the Conservative Party. UK Prime Minister, Boris Johnson is travelling to New York today as the annual UN General Assembly kicks off later in New York. We can expect tough talk against Iran's purported backing of the recent drone attacks by Yemeni rebels on oil refineries in Saudi Arabia. The attacks saw the biggest jump in crude prices since markets started pricing contracts for one month delivery with Brent jumping nearly $10pb intraday on 16th September.
Key MoversThe aforementioned UN General Assembly will likely deliver this weeks market moving headlines with US President, Donald Trump likely to have Iran's President Hassan Rouhani in his cross-hairs after the bombing of Saudi Arabias oil refineries. A potential escalation of tensions between the two sides looks possible and markets appear a little jittery with equities mixed and the yen well bid before the summit begins in New York. USD/JPY trades at 107.50.Away from the UNGA the euro has had a bad start to the week with the monthly PMI readings again under performing. The most eye catching was a miserable German Manufacturing PMI which posted a 123 month low of 41.4 vs an expected 44.6. The EZ's biggest economy is suffering in the face of the China/US trade dispute which has led to a drop off in orders in its dominant export sector. EUR/USD has slipped back under 1.10 as a result with little sign of any turnaround due anytime soon. Other events happening this week include speeches by European Central Bank chief, Mario Draghi today and Thursday. The RBNZ interest rate decision is due Wednesday night with no change in policy expected. We get the final reading of Q2 growth from the States on Thursday with no change from 2% y/y predicted.
- GBP/USD: 1.2390 - 1.2520 ▼
- GBP/EUR: 1.1280 - 1.1380 ▼
- GBP/AUD: 1.8320 - 1.8470 ▼
- GBP/NZD: 1.9780 - 1.9950 ▼
- GBP/CAD: 1.6490 - 1.6630 ▼