Daily Currency Update

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Markets take stock ahead of Thanksgiving

GBP - British pound

Markets globally settled somewhat yesterday and almost took a breath and stock check. For Sterling it was another roller-coaster of a day though even if volatility wasn’t quite at the highs of earlier in the week. The currency was rocked in the early afternoon by the usual, Brexit, as rumours from Europe suggest that negotiations are not moving forward at any pace and there is a concern that negotiations are still continuing so late in November. The next deadline and a potential rocket of a day for the Pound could be the EU Summit on 10-11th December however these deadlines have come and gone and this next one will almost certainly be moot. Looking at the current GBPUSD levels investors have already priced in a deal and are confident that an agreement will be made which is somewhat alarming because of the simple fact that if a deal isn’t struck Sterling is now inflated and has further to fall.

Key Movers

Remember the mega European Union $2 trillion spending package that was agreed at an EU summit towards the end of July – well it looks to have hit another hurdle. Last week Poland and Hungary effected vetoed the package and its distribution to EU countries because of a clause that ties the aid/relief to the rule of law. Both Hungary and Poland are already being investigated by the EU as to whether they have violated democratic norms and this impasse ultimately stalls any EU recovery. The Euro so far seems resilient to the headlines but could weaken if a resolution isn’t found.

In the US it was relief for investors as the Federal Reserve didn’t throw up any surprises in its minutes from the last meeting although a change in guidance on quantitative easing could be expected to come at the next meeting in December. For now investors and market participants can enjoy Thanksgiving in the US whilst further afield we are left wondering what thinner liquidity in the market could mean for the major currencies. One issue that Thanksgiving could create is a significant new rise in coronavirus cases in the US. California has recently broken its daily record whilst New York, the old epicentre, has registered the most number of cases since April.

Expected Ranges

GBP/USD: 1.3310 - 1.3400 ▲

GBP/EUR: 1.1200 - 1.1280 ▼

GBP/AUD: 1.8150 - 1.8220 ▼

EUR/USD: 1.1920 - 1.2000 ▲