Daily Currency Update

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USD weakness continues

GBP - British Pound

Sterling has advanced against both the EUR and USD in the past 24 hours as Brexit talks resume. GBP/EUR still remains range bound, but movement overnight has taken the currency pair from 1.1030 to above 1.1100 and GBP/USD is now back above 1.3250, which were the levels seen prior to sterling’s Covid-19 crash back in March. However, it is worth mentioning the movement in GBP/USD has more to do with USD weakness than it does pound strength, as the ongoing effects of the Federal Reserve’s stimulus programs and lowered expectations for fresh stimulus saw the USD fall.

Despite the recent gains for the pound, a bumpy path lies ahead, as the next round of UK-EU trade talks occur. The December deadline is looming and as the UK recovers from the Covid-19 related recession, Brexit will begin to hold headlines once again. Investors and traders have had conflicting views as to where the pound will go next, with some believing it will advance further and others feeling these gains have been overdone. This uncertainty can only be expected until we know what trade deal the UK will likely have come January 2021.

Data remains thin on the ground for the UK, but early inflation data this morning beat expectations. This is what bolstered GBP/EUR to 1.1105 at the highs and GBP/USD to 1.3264.

Key Movers

The USD suffered weakness across the board yesterday as investors continued to look for alternative currencies/products to the US dollar. Gold has advanced on the risk-off trade, advancing it to over $2,000 per ounce earlier this week. And so have safe haven currencies such as the CHF and JPY, which has seen the US Dollar sold in comparison, dragging it to new lows against both the EUR and GBP. EUR/USD made a break for 1.2000 again overnight, reaching 1.1960 at the high and GBP/USD is above 1.3250, which was last seen in December 2019.

The FOMC meeting minutes are eagerly anticipated later today as investors looks for hints as to the Federal Reserve’s next move. Although the Fed minutes may offer light relief to the falling USD, many will be waiting on September’s stimulus announcement.

Expected Ranges

GBP/USD: 1.3150 - 1.3320 ▲

GBP/EUR: 1.1030 - 1.1150 ▲

GBP/AUD: 1.8140 - 1.8310 ▲

GBP/NZD: 1.9860 - 2.0100 ▼

GBP/CAD: 1.7320 - 1.7440 ▲