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Talk of pound hitting parity hits the town

GBP - British Pound

Even though yesterday saw the pound hit the break on its incredible slide investors are beginning to worry that the pound could hit parity or 1:1 against the USD later in the year if the UK crashes out of the EU in a no deal Brexit scenario. This shift in focus from investors comes off the back of comments from Johnson and Hunt earlier in the week suggesting they are both vying for a hard Brexit a move which has also increased the chances of a general election. Indeed some forecasters are now expecting that we will have to wait until 2020 or 2021 for sterling to strengthen again. The 'recent' historical low for the pound against the USD is 1.05 and in the eyes of some this level could definitely be broken.

Key Movers

Elsewhere the mood across the rest of the market was that of woe as the earnings season in the US began to show the effects of the ongoing US - China trade war. The negotiations recently have stalled and Donald Trump stated on Monday that talks still have a long way to go. For the US dollar therefore it was a day of trouble as it slipped against most of its counterparts.

Recently the Aussie and Kiwi dollars have benefited from the return of solid data out of China (see China's recent muanufacturing data from Monday) and both currencies have surged over recent weeks. Indeed GBP/AUD is now settled around 6 month lows. However, with the trade war still rumbling away and Trump indicating that there is still a lot of progress to be made, there has to be questions asked as to how long the antipodean currencies can hold onto these levels.

Expected Ranges

GBP/USD: 1.2355 - 1.2420 ▼

GBP/EUR: 1.1040 - 1.1120 ▼

GBP/AUD: 1.7630 - 1.7780 ▼

GBP/NZD: 1.8440 - 1.8530 ▼

GBP/CAD: 1.6175 - 1.6250 ▲