Daily Currency Update

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Brexit Trade Negotiations and Coronavirus Fears Weigh On Markets

GBP - British Pound

Sterling opens lower this morning as uncertainty surrounding the post-Brexit trade deal between the European Union and the UK weighs on the pound.

The EU’s top Brexit negotiator, Michel Barnier, turned down Boris Johnson’s claims over no checks at the Northern Irish borders denting Johnson’s strategy.

Furthermore, the Irish Taoiseach, Leo Varadkar, stated the EU will have an upper hand in Brexit talks that could miss the end of the year deadline, presenting more pressure on GBP.

This has meant GBP/USD has fallen back towards the low 1.30 level after making a run towards 1.31 yesterday, while GBP/EUR has dropped over 0.75 cents from yesterday's high of 1.1889.

It is therefore likely sterling will remain on the back foot in the lead up to Thursday's BoE Monetary Policy statement and Interest Rate Announcement.

Key Movers

The safe-haven US dollar, Japanese Yen, and Swiss Franc were the main benefactors through yesterday’s trading as fears mounted that the coronavirus will morph into a global health emergency.

The Chinese Yuan has come under heightened selling pressure as concerns continue to increase that Chinese health authorities have not reacted fast enough to contain the spread of the deadly respiratory virus.

EUR/USD has erased almost all of its December gains and is fast closing in on the psychological support level of 1.10. Weaker than expected German IFO Business Climate data and Coronavirus fears have weakened the Euro's position and at the same time strengthened the USD.

With a lack of data from both Europe and the UK, markets will look towards the main print of US durable goods orders, due at 1.30pm, for direction.

Expectations are December’s orders will post 0.4%, improving from the -2.1% previous read. If this rings true, there could be further upside for the USD.

Expected Ranges

GBP/USD: 1.2965 - 1.3055 ▼

GBP/EUR: 1.1765 - 1.1855 ▼

GBP/AUD: 1.9230 - 1.9350 ▼

GBP/NZD: 1.9895 - 2.0015 ▼

GBP/CAD: 1.7135 - 1.7220 ▼