Daily Currency Update

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GBP dwindles as Brexit concerns resurface

GBP - British Pound

The pound has continued to drop off over the course of this morning to continue an underwhelming start to the week. Yesterday’s Markit PMI figures which came in slightly below expectation kicked things off. It continues to be political sentiment that dictates the direction of the pound.
Election euphoria has now been replaced by a realisation that a long road of trade talks lay ahead between the UK and EU. Reports that Boris Johnson intends to add a new clause to his Brexit bill that would legally block the ability to extend the transition period beyond the current deadline of December 31, 2020 could reignite the prospects of a no-deal Brexit and serve to weaken GBP.
Subsequently, GBP is trading back down to the pre-election levels of 1.1845 against the EUR and 1.3190 against USD respectively.
UK unemployment figures for the last 3 months are released at 09.30 this morning with the expectation of the jobless figure rising to 3.9%, which could place further pressure on sterling.

Key Movers

Across the pond, industrial production figures for November are released at 14.15, however market reaction is likely to be fairly limited. The focus of attention for USD continues to be on the legal conclusion of phase 1 of trade talks with China. In a trade war characterised by rhetoric and tit for tat tariffs, legal confirmation on things could put traders at ease. Once officially signed and formalised, the focus will no doubt turn to a much harder phase two.

Yesterday’s European PMI data largely met market expectations and therefore the reaction on the EUR was muted. There is no real data of note today that could impact the EUR. EUR/USD continues to trade within the $1.11-1.12 range.

Expected Ranges

GBP/USD: 1.3150 - 1.3340

GBP/EUR: 1.1820 - 1.1950

GBP/AUD: 1.9225 - 1.9380