Daily Currency Update

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The calm before the storm

GBP - British Pound

The markets remained relatively muted over the course of the last 24 hours, though GBP saw some weakness on the back of news that the parliament could not force through a guaranteed extension to the Brexit deadline day in the event of a deal not being agreed.

Boris Johnson, the UK PM, and the EU have given themselves a week to try and drum up a deal ahead of the October 31st deadline. This has naturally increased the likelihood of a no deal Brexit to 65%, putting some pressure on the pound. Johnson has confirmed that he is willing to make minor concessions to the deal currently presented, and this is widely expected to be rejected by the EU.

In Europe, we saw German industrial production come out at 0.3% for August this morning, the best reading since March. The manufacturing sector recorded a 0.7% increase. Europe's largest insurance company, Allianz, has launched an attack on Mario Draghi, the head of the ECB over the 'politicisation of monetary policy in the region’.

Across the pond in the US, Donald Trump's impeachment saga continues. Andrew Bakaj, the attorney for the first whistle-blower (who raised concerns around President Trump attempts to press his Ukrainian counterpart to investigate a political rival) says his firm now represents “multiple whistle-blowers.” This could weigh on USD volatility in the coming weeks, as we draw closer to elections.

Key Movers

Sterling remains on the back foot with so much uncertainty on the current proposed deal, and the deadline for approving the current deal set for the end of this week. The chances of a no deal Brexit have now risen.

The stock markets have started the week relatively muted after falling sharply on Wednesday and Thursday last week. UK stocks had their worst day in more than three years after suggestions of a global slowdown. Today sees a busy calendar of central bank speakers, with Fed Chair Powell heading up the bill.

There was further damaging news for the UK's retail sector, with September sales said to be the worst on record for retailers. Total sales fell 1.3% compared to 0.7% rise in the previous year according to a report from KPMG and the British Retail Consortium. Given the backdrop of the Brexit deal being 'thrashed out' this week according to Boris Johnson, data like this may not help the pound.

Expected Ranges

GBP/USD: 1.2240 - 1.2350 ▼

GBP/EUR: 1.1120 - 1.1210 ▼

GBP/AUD: 1.8090 - 1.8240 ▼

GBP/CAD: 1.6260 - 1.6380 ▼