Daily Currency Update

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Brexit deadline looms

GBP - British pound

The end of last week saw Bank of England (BoE) Governor Andrew Bailey give his opinion on the health of the UK economy and how he sees the nation moving forward. Bailey stated that the economic recovery has been very uneven and suggested that the ‘second wave’ will not cause the long-term damage that the first wave brought with it.

He also exclaimed that the transition will be tough, but he has high hopes that a Brexit deal will be agreed. Unfortunately, a deal is looking elusive as the EU’s Barnier left talks early on Friday. There are rumours, however, that the UK is looking to extend their self-imposed deadline from 15th October.

Chances are we’ll see an extension by Wednesday which could give GBP a slight lift.

Friday also saw the release of UK GDP figures for August, which showed a 2.1% rise, but was less than the 4.6% expected despite the governments ‘Eat Out to Help Out’ scheme. This had little impact on GBP however markets focussed on Brexit headlines throughout the day.

Looking ahead to this week, Brexit headlines will again dominate market movements with the upcoming 15th October Deadline on Thursday but also worth looking out for UK unemployment and US Consumer Price Index numbers tomorrow as well as US Retail Sales Figures on Friday.

Key Movers

With the US election expected to be a key driver of markets in the coming month, the news that Joe Biden is beginning to pull away in the polls again has been welcomed by markets. In response, President Trump has made a U turn regarding a new fiscal stimulus package and is now discussing different options with the Federal Reserve committee.

As such, demand has shifted away from the safe haven USD and move towards currencies such as GBP, EUR, AUD and NZD.
EUR/USD, for example, rose back above the 1.18 level while the AUD and NZD have also seen gains against the US dollar.

As mentioned above, US retail sales will be a strong focus for this week’s data releases but it will also be worth keeping a close eye on the Empire State and Philadelphia manufacturing surveys due on Thursday. Many Americans received fewer jobless benefits in the month of September so will be important to see how that impacted spending.

Expected Ranges

GBP/USD: 1.2975 - 1.3125 ▲

GBP/EUR: 1.0975 - 1.11 ▲

GBP/AUD: 1.7965 - 1.81 ▲

GBP/CAD: 1.7035 - 1.7150 ▲

GBP/NZD: 1.9475 - 1.9625 ▲