Daily Currency Update

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Johnson warns of No Deal Brexit

GBP - British pound

The pound saw much of its recent gains eroded on Thursday as new of Brexit turns sour. Wednesday’s dinner between PM Boris Johnson and European Commission President Ursula Von Der Leyen resulted in both walking away without any substantial progress made. Johnson has since warned that there is a high chance of a no deal Brexit and to prepare for the worst. This has knocked the confidence in the pound, causing GBP/USD to drop from highs of 1.3540 last week, to just above 1.32 handle now. Johnson has said he would like a concrete plan in place by Sunday, which will outline the future of talks and options going forward.
In other news, the pound has also felt the force of COVID. With cases once again on the rise, it is likely the Government will force certain areas into ‘Tier 3’ at the next review on Wednesday, including London. This obviously affects trade and business confidence, in turn, knocking the pound.

Key Movers

The ECB increased the overall size of its Pandemic Emergency Purchase Programme stimulus program by 500 billion euros to 1.85 trillion euros, in line with market expectations. The program has also been expanded by 9 months, through to March 2022, which eases the financial burden on corporates, meaning less borrowing and debt. The Euro strengthened slightly as investors decide they like the policy move, however the ECB will monitor the Euro over the next few months in an attempt to combat stagnant inflation.
In the US, lawmakers still cannot agree on a stimulus package to protect citizens who have been worst affected by the effects of the pandemic. A $908b bipartisan proposal has been rejected by Republican Senate Leader Mitch MccConnell after it he was told it would likely not get Republican support it needed. They will resume negotiations next week.

Expected Ranges

GBP/USD: 1.3115-1.3350 ▼

GBP/EUR: 1.0830-1.1080 ▼

GBP/AUD: 1.7450-1.7730 ▼

GBP/CAD: 1.6725-1.6930 ▼