Daily Currency Update

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The pound's sharpest decline since March

GBP - British Pound

Boris Johnson's ongoing demands and threats to walk away from discussion if the EU do not budge continues to put significant pressure on the pound. Internal frustration in the UK government is growing, as a senior lawyer quit over disagreements around how the withdrawal agreement should be negotiated.

According to senior figures in Germany, the latest signals from London do not raise hopes for a Brexit deal. As we all know, a disorderly Brexit would be disastrous for the economy in the UK and only add to the already dire situation post the pandemic.

This morning sees the sharpest decline in the pound since the Black Monday fall in March post the start of the pandemic. Investors are still net long the pound, but it looks like a sell-off has started and we could be in for a rocky ride for the pound in the coming weeks.

All eyes are on 11-30am GMT, when the UK government will be releasing the internal market bill. It will lay out the blueprint for life outside of the EU, but is expected to be somewhat controversial, breaking specific international laws around fisheries and state aid if it was to be implemented. This could be further damaging to the pound.

Key Movers

The US Dollar takes its cues this week from political sentiment and pharmaceutical headlines, after a week of little to no data. President Trump was up to his usual tricks of throwing out threats to China, while the Chinese toughened its pressure on Australia by accusing an Australian journalist of carrying out illegal activities.

Trump has also suggested that a vaccine could be ready in October but general scepticism and overall concerns about the safety of a fast tracked vaccine has investors shrugging off this comment.

The US has an ever increasing influence on the Brexit negotiations too, with senior Democrats warning that any attempt by the UK government to backtrack on the Brexit agreement on Northern Ireland would jeopardise a future US-UK free trade deal. Joe Biden is particularly partisan on this topic being an Irish-American. He is a staunch defender of the Good Friday Agreement, of which the US is the guarantor, and which requires an open border between the Republic of Ireland and Northern Ireland.

In other news, AstraZeneca shares plunged in extended trading after the company said a late-stage trial of its Covid-19 vaccine candidate has been put on hold due to a suspected serious adverse reaction in a participant in the UK.

Expected Ranges

GBP/USD: 1.2860 - 1.2955 ▼

GBP/EUR: 1.0920 - 1.1005 ▼

EUR/USD: 1.1735 - 1.1810 ▼

GBP/AUD: 1.7710 - 1.7985 ▼

GBP/NZD: 1.9310 - 1.9675 ▼