GBP - British Pound
The pound and it's major currency pairs remain relatively muted after news of a possible breakthrough in the Brexit negotiations saw a brief but healthy uptick. GBPUSD almost touched 1.23 yesterday after diplomatic sources close to the talks said European governments are prepared to concede a unilateral revocation of the withdrawal treaty. Under these proposals, Northern Ireland would stay in the customs union and single market until a “double majority” at Stormont — of unionists and nationalists — votes to leave. However the proposal was quickly rejected by the DUP and some senior Tory members, which saw the pound firmly put back in it's place, back into the low 1.22's.
The data calendar remains very subdued, and the Federal Reserve's minutes from its September meeting did nothing to drive the US Dollar. The minutes confirmed the current data dependent policy stance, but there was the increasing risks to growth in the US. This was very much in line with the weaker than expected manufacturing and services data which came out last week.
Today's US-China trade talks will be watched keenly for market direction and risk sentiment. The market may perceive news that the Chinese are preparing to increase purchases of US agricultural products as positive and see an appetite for riskier assets, and this could be backed up by the recent positive moves in global equities, with the S&P 500 and the Euro Stoxx 50 both up by almost 1% overnight.
Today is definitely the busiest day for the data calendar this week, with all eyes on the latest update on UK GDP month on month. This figure was expected in at 0.1%, with a subdued figure expected after the weak data out of the UK last week. We have just seen the figure printed at -0.1%, which is worse than expected and has naturally put further pressure on the pound and adding to concerns that the UK could be heading towards a recession.
Over in the US, we will be watching the latest printing of the CPI data for September. With lower prices, inflation should be subdued below the 2% mark. In the Eurozone, we have the ECB's account of its September meeting, which is unlikely to surprise markets.
1.2160 - 1.2245 ▼GBP/EUR:
1.1075 - 1.1150 ▼GBP/AUD:
1.8060 - 1.8210 ▼GBP/CAD:
1.6190 - 1.6345 ▼