Daily Currency Update

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Sterling suffers as reality sinks in

GBP - British Pound

The joys for the pound last week were all but erased yesterday as the reality of leaving the EU sunk in for many investors. This was coupled alongside comments from Boris Johnson over the weekend that the UK would look to avoid following EU rules once the transition period has ended. The worry from investors is that the UK could inadvertently be heading towards a de facto 'No Deal' Brexit at the end of the year. The pound therefore dropped from the mid 1.31s to below 1.30 this morning. This week, there may not be much reprieve for the pound particularly with risk sentiment increasing slightly elsewhere.

Key Movers

This slight shift in risk sentiment was seen in the performance of the Aussie Dollar as the RBA kept its interest rates on hold and the Aussie was able to erase part of the losses it has suffered since the start of the year. The Aussie Dollar, which is often seen as a litmus indicator for the health of the Chinese economy, is still at a big risk particularly as the coronavirus spreads. The number of people infected has now increased to over 20,000 whilst a second person outside of China has died. There are now reports that Beijing could ask for concessions regarding some of the details on the recent 'phase 1' trade deal that has been agreed. What is certain is that Chinese growth will certainly be hit in Q1, and with it the Australian dollar.

Elsewhere, the results from the Iowa caucus to select the Democratic presidential candidate have been delayed in what officials are calling a 'reporting issue'. Whilst not materially significant at the moment it isn't a good look or start from the Democrats.

Expected Ranges

GBP/USD: 1.2885 - 1.3140 ▼

GBP/EUR: 1.1700 - 1.1920 ▼

GBP/AUD: 1.9250 - 1.9500 ▼

GBP/CAD: 1.7200 - 1.7320 ▼