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Sterling falls as No Deal chances rise.

By Jake Trask

The pound remains under pressure this morning as ongoing Brexit concerns continue to weigh on sterling. Comments in the Sunday Times yesterday by international trade secretary, Liam Fox put the chances of exiting the EU without an agreement at “60-40.” The comments have kept GBP/USD under 1.30 this morning as concerns grow that an exit without a deal and a default to World Trade Organisation tariffs are becoming more likely by the day. Liam Fox’s comments follow on from comments made by Bank of England Governor, Mark Carney on BBC Radio 4’s Today programme on Friday which also highlighted that a no deal scenario was a possibility. GBP/USD is currently trading around 1.2990 close to the 19th July 10 month low of 1.2955. Data-wise there is little of note from the UK until Friday when we get a slew of top-tier prints including the first reading of Q2 GDP which is expected to print 0.4% doubling Q1’s snow affected number.

Friday saw the latest US Jobs Report from the States with the headline Non-Farm Payrolls employment figures showing an additional 157k people had been added to the workforce for July, missing the 191k estimate by a reasonable distance. The shortfall was countered by the June number being revised up from 213k to 248k however the main focus was the hourly earnings number which hit target of 0.3% m/m. As is often the case EUR/USD whipsawed on the release rising, falling then rising again between 1.1555 and 1.16. Like the pound it’s a relatively quiet week aside from Friday when we get CPI numbers which are expected to show a monthly uptick of 0.2% for both the overall and core print. EUR/USD trades at 1.1560.

Holiday season is in full swing throughout Europe and with record temperatures and no data of note from the Eurozone this week it will likely be events from outside the EZ that affect the shared currencies value. GBP/EUR is lower on the comments from Mark Carney and Liam Fox that were mentioned earlier trading around 1.1220 at the moment.

AUD/USD is currently trading just shy of the .74 mark in the middle of its .7320 and .7480 range that is has kept throughout most of the past couple of months. Trade tensions between the US and China have kept the commodity currencies capped throughout the summer and with US President Donald Trump constantly upping the threatening language (usually via Twitter) on what’s due next to be targeted there seems unlikely to be any major move north for the Aussie anytime soon. It’s a pretty busy week from Down Under with regards to data; tonight we have the RBA Rate Statement; RBA Governor Lowe speaks tomorrow night and on Thursday night we have the RBA Monetary Policy Statement. GBP/AUD trades at 1.7540.

USD/CAD has flitted between 1.2970 and 1.31 for most of the past ten days and with today being a Bank Holiday in Canada for Civic Day its unlikely we will see much movement for the loonie today unless there is some big new news re: Trump/trade or oil. GBP/CAD sits at 1.6860 its lowest level since January.

Like Australia there are some top-tier data sets this week from New Zealand. Tomorrow night we have the latest quarterly inflation expectations number, Wednesday night sees the latest RBNZ rate decision and press conference and Thursday night sees the Business NZ Manufacturing Index for July. GBP/NZD trades at 1.9240.