Daily Currency Update

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Dollar fightback continues

GBP - British Pound

GBP/USD has continued to fall back as the dollar steadies after its recent mass sell off by the markets. Cable has retreated from close to 1.35 seen on Tuesday to trade back under 1.33 at the time of writing as Brexit headlines re-emerge after a Summer off. With parliaments around Europe returning after their Summer recess it was only a matter of time before comments from either side would start to appear and EU chief negotiator, Michel Barnier, was again yesterday downbeat on the chances of a deal being done by the end of the year. Barnier stated he was "worried and disappointed" about the slow progress after meeting members of the UK delegation yesterday. There is a full round of further negotiations next week, however it seems highly unlikely we will see any major breakthroughs, if previous history is anything to go by. Barnier has stated that a deal must be done by the end of October to leave time for it to be ratified for the new year so expect sterling to wobble the closer we get to this deadline without anything being rubber stamped.

Also not aiding the pound's cause were comments from Deputy Bank of England Governor Dave Ramsden who hinted that there could be more QE coming from the Bank should the economic rebound be as sharp as expected as we head towards Christmas.

GBP/EUR continues to tread water around the 1.1250 handle.

Key Movers

The dollar seems to have regained its footing after weeks of being dumped by the markets with some stability returning to its value. After EUR/USD broke above 1.20 for the first time since May 2018 on Tuesday, it has dropped to around the 1.18 handle as growing Covid-19 vaccine hopes aid the dollar's recovery as well as dovish comments from European Central Bank policymakers. Should the euro remain elevated against the dollar then we can expect to hear more jawboning from ECB members in an effort to talk down the currency without actually opening the toolkit. Next Thursday sees the ECB interest rate decision with no change in policy expected however mentions of the exchange rate will be a key area of focus.

Today's main data comes from the States with Unemployment Claims due at 1:30pm. The now closely eyed release is expected to show just under 1m people filed for unemployment insurance last week. At 3pm we have the US ISM Non-Manufacturing (services) PMI which is expected to slip a touch to 57 from 58.1.

As mentioned yesterday, this week's main event will be the US Jobs Report on Friday with around 1.4m people expected to have been added to the workforce in August and the unemployment rate due to drop back under 10%. Expect comments from President Trump should figures beat expectations and conversely from Democrat nominee Joe Biden should they disappoint. EUR/USD sits at 1.1815 with USD/JPY at 106.25

Expected Ranges

GBP/USD: 1.3250 - 1.3380 ▼

GBP/EUR: 1.12 - 1.13 ▼

GBP/AUD: 1.8130 - 1.8270 ▲

GBP/NZD: 1.9640 - 1.98 ▼

GBP/CAD: 1.7330 - 1.7480 ▼