Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

Pound holds gains on MPs' plan to avoid no-deal Brexit

GBP - British Pound

GBP/USD continues to hold above the 1.22 handle as parliament's return from recess draws closer and Brexit chatter gets louder and louder once more. The latest news to lift the pound was news that opposition MPs led by Labour leader Jeremy Corbyn had come to an agreement on a collective move to try and avoid a no-deal Brexit by attempting to draft emergency legislation blocking a move asap. It is expected they will apply for an emergency debate on the subject next week and request the cancellation of the usual party conferences to try and postpone once again the UK's departure from the EU and make it a legal requirement to have a withdrawal agreement with the bloc.

The news saw some sterling volatility yesterday afternoon with cable briefly touching 1.23 before retracing. Discussions are ongoing between UK and EU representatives on the Irish border situation however despite some slightly warmer sounding sentiment of late the situation remains deadlocked.

After a few weeks of relative Brexit calm from next week we can expect blanket news coverage once again and some sharp pound moves as a result. GBP/USD trades just below 1.23 with GBP/EUR around 1.1075.

Key Movers

To add to the EU's Brexit induced headache it appears Italy is close to yet another general election as the current coalition falls apart. The two main parties, Five Star and the Democratic Party have until tonight to try and find a resolution to their issues or the public will vote to in an effort to form Italys 62nd government since WW2. The uncertainty will do little to boost the shared currency value especially with Germany looking like it teetering on entering a technical recession.

What the world needs more than anything is a trade deal to be agreed between China and the US however that seems far from certain with Donald Trump's recent claim he had received a call from Chinese officials to restart trade talks being rebuffed by the Beijing hierarchy. As much as Trump may appreciate the knock on effect of lower US interest rates, the recent inversion of the two year, ten year Treasury yield means markets see a recession coming in the US, possibly ahead of the 2020 election which may impact the Presidents second term ambitions. The next round of tit-for-tat tariffs are due to be implemented on 1st September and markets remain jittery with USD/JPY back under 106.

Commodity currencies remain under pressure with AUD/USD being pulled lower overnight by worse than expected construction data. AUD/USD hasnt been north of .70 in over a month now and the local buck (and the Kiwi) badly need some good news re: the current trade impasse.

Expected Ranges

GBP/USD: 1.2170 - 1.2310 ▲

GBP/EUR: 1.0975 - 1.11 ▲

GBP/AUD: 1.8075 - 1.8220 ▲

GBP/NZD: 1.9225 - 1.94 ▲

GBP/CAD: 1.6210 - 1.6350 ▲