Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools.

Brexit trade talk heats up ahead of a busy UK calendar

GBP - British Pound

With little in the way of data yesterday the Pound erased some of its gains we have seen over the last couple of weeks, albeit rather minor. The rest of the working week does get a lot busier and attention now turns to the month's Claimant Count Change and three-month to December Unemployment Rate, coupled with the Average Earning figures for the 3Mo/Yr, released at 9.30am this morning. The forecast is for the unemployment rate to hold steady at 3.8%. Its largely expected wage growth will continue on its path of deceleration and could cause Sterling to sell-off.

Brexit news hit the wires overnight and this too was a factor in the pound's negative move. The UK PM Johnson’s Brexit aide and the key negotiator David Frost was speaking at the Université libre de Bruxelles, during the early Asian session. His view on the ‘UK making its own rules’ after the transition period and the ‘freedom to diverge from EU rules’ has sparked further fears of tough and fierce trade negotiations. Speaking on Sunday, French Foreign Minister Jean-Yves Le Drian predicted the two sides would "rip each other apart" as they strove for advantage in the negotiations. Trade talks are due to start next month and if the last 24 hours of talks are anything to go by, we are in for a very interesting and turbulent year.

Cable has slipped below the 1.30 handle on the back of the news and trades at 1.2985. GBP/EUR followed suit breaking back below 1.20 and now moves at 1.1989. These moves could start the trend of today's moves and an increase in the unemployment rate and slowdown in wage growth could help further accelerate the quid's drop.

Key Movers

USD trade was thin yesterday as the states observed the presidents day public holiday. The Dollar's safe haven status was exaggerated overnight after Apple INC warned about a slowdown in production since the outbreak of the coronavirus. Demand has dwindled in China and this has caused Apple to warn of its inability to meet its guidance. Whilst many know or believe this would be the repercussions of the virus, Apple is the first major institution to publicly speak about the financial implications.

It’s a relatively slow introduction to start of the week for the Greenback with little in the way of data releases today. This shouldn’t damper any moves in the Dollar though with new virus cases still being confirmed the Dollar is likely to keep pushing higher.

The Eurozone continues to be weighed down by German recession fears. Cause for concern wasn’t helped yesterday after the German central bank, Bundesbank, reported its monthly report on growth. The only takeaway comment of note was ‘the economic growth will likely remain weak in the first quarter of 2020’. EUR/USD continues to trade on or near its 34 month low and looks set to continue.

The Euro will be looking for some relief in its decline today from the German ZEW Economic Sentiment release. On paper its not looking likely as a drop in the number is forecast so could add further worry for the single currency.

Expected Ranges

GBP/USD: 1.2880 - 1.3020 ▼

GBP/EUR: 1.1910 - 1.2020 ▼

GBP/AUD: 1.9350 - 1.9500 ▲

GBP/NZD: 2.0150 - 2.0380 ▲