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Pound pressured on Barnier/Saunders comments

GBP - British Pound

The pound has started Friday on the back foot as Brexit concerns see it dragged lower across the board. This time last week GBP/USD was looking like it could break above 1.26 for the first time since June, however it has steadily been heading south ever since with a break below 1.23 seen earlier this morning. The angry exchanges between MPs at Westminster on Wednesday after the cancellation of the Queen's speech laid bare the ongoing divisions in the House of Commons, hitting sterling sentiment. Extra fuel has been poured on the fire this morning with reports that EU chief Brexit negotiator, Michel Barnier, has called the UK's proposed Irish Backstop alternatives inoperable in a meeting with other EU officials. This week's final twist of the knife has come from Bank of England MPC member, Michael Saunders, stating that whatever happens re: Brexit the banks next move with rates could be lower. This is a change of tone from the bank which previously had been believed to be waiting for a Brexit resolution (one way or the other) before adjusting policy.

With the clock ticking down to the UK's departure, and no confirmation that PM Boris Johnson will comply with the Benn Amendment forcing a delay to Brexit, sterling sentiment is fragile to say the least. The change in stance from the BoE will do little to boost confidence so the current path of resistance seems lower until we get some concrete news re: a delay/deal.

Cable is down to 1.2275 with GBP/EUR at 1.1250.

Key Movers

Donald Trump's phone call to Ukrainian President, Volodymyr Zelensky continues to dominate the news around the world with Trump angrily rejecting accusations that he tried to bribe Zelensky into investigating Joe Bidens 2020 Presidential campaign by holding back hundreds of millions of dollars of military aid to the former soviet state. Trump has taken to his favoured medium of communication, Twitter, to denounce the Democrats investigation into the call as a witch hunt. The whistleblower has been reported as being a CIA agent posted within the White House with reports emanating that the call wasn't logged in the usual manner on the normal database but was stored on a computer normally reserved for classified information. The release of rough notes made by White House staff members of the call was meant to diffuse the situation, however the fact the full verbatim transcript hasn't been released has seen the Democrats accuse Trump of influencing a foreign leader to interfere in next year's election, which is an impeachable offence.

Despite all the accusations for the time being Trump being removed from office seems far fetched however the incident has done little to boost risk assets, already suffering from other geopolitical issues this week.

The dollar has remained well bid throughout the furore with EUR/USD moving ever closer to 1.09, AUD/USD and NZD/USD both remain depressed and GBP/USD moving lower albeit for reasons more closer to home.

Expected Ranges

GBP/USD: 1.2250 - 1.2380 ▼

GBP/EUR: 1.1190 - 1.1330 ▼

GBP/AUD: 1.81 - 1.8275 ▼

GBP/NZD: 1.9450 - 1.9630 ▼

GBP/CAD: 1.6245 - 1.6410 ▼