Daily Currency Update

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Voting to close in Tory leadership ballot

GBP - British Pound

Its a key week for British politics with voting amongst Tory party members set to close at 5pm today as they decide on who will be the next leader of the Conservative Party and therefore UK Prime Minister. If the bookmakers are to be believed then Boris Johnson is all but a dead cert to land the top job with some having him around 1/200 to win. Whoever does win the vote will inherit a deeply divided party with Chancellor, Philip Hammond and Justice Secretary, David Gauke saying they will quit their posts ahead of the new PM taking office on Wednesday evening. Brexit rhetoric is set to be the main driver of sterling tomorrow from whoever gets the job. A victory for Johnson is already priced into the equation so it will be comments on his determination to lead us out of the bloc on Halloween with or without a deal that will likely guide its direction. BoJo has pledged to get us out of the EU by 31st October however he could find himself in an impossible position with MPs having to ok any exit and last week the House of Commons also voting against a forced closure or prorogation of parliament in an effort to the UK exiting the bloc by default. GBP/USD currently trades around 1.2480 with GBP/EUR at 1.1130.

Key Movers

Its a key week for the euro with policy makers due to announce its latest interest rate decision on Thursday. The overall consensus is that rates will remain on hold however there is a growing chance we may see a cut ahead of an expected cut from the US Federal Reserve next week. The ongoing trade war between the US and China is having a material impact on the EZ's economy especially at the German factory floor. We will get the latest health-check of Europe's main service and manufacturing sectors on Wednesday with the monthly PMI numbers due. The main talking point and mover of the euro will likely be the German Manufacturing number which has been woeful of late. Another poor number of around 45 is expected, well below the 50 mark that signifies a contraction. If we see a sub-50 reading then this would be the worst run since late 2012, early 2013 when Europe was in the grip of the Greek debt crisis.

From the States Friday's advanced GDP figure will be the main mover of the greenback with a worse than expected number likely to reinforce the calls for a more aggressive move from the Fed at the July 31st interest rate decision. A 25bp cut is what markets are expecting however should we see a big miss then the chances of a 50bp cut will rise.

EUR/USD trades at 1.1220 with USD/JPY at 107.85.

Expected Ranges

GBP/USD: 1.2430 - 1.2560 ▼

GBP/EUR: 1.1060 - 1.1165 ▼

GBP/AUD: 1.7665 - 1.78 ▼

GBP/NZD: 1.8360 - 1.8525 ▼

GBP/CAD: 1.6230 - 1.6380 ▼