Home Daily Commentaries Brexit headlines back in focus as Tory conference gets underway.

Brexit headlines back in focus as Tory conference gets underway.

Daily Currency Update

GBP/USD drifted lower on Friday following the release of weaker than expected Q2 final GDP. It didn’t take too long to recover, though. Quarter end flows – or dollar selling - kicked in as New York entered and GBP/USD moved higher, albeit the range on the day was fairly limited.

There wasn’t much by way of Brexit headlines last week, relatively speaking, but that may change this week with the Tory conference in full swing, and the potential for various in-party clashes on the subject. Should this be the case, GBP/USD will do well to hang on to the 1.30 big figure. The main event will be PM May’s speech on Wednesday.

On the data front, we have manufacturing, construction and services PMI due for release on Monday, Tuesday and Wednesday respectively, although it’s questionable that these will have much impact while the Conservative conference is ongoing.

Key Movers

The dollar was sold off on Friday afternoon on the back of month-end and quarter-end re-positioning. US data wasn’t particularly helpful to the dollar’s cause with Chicago PMI, amongst other sets of lower tier data, printing weaker than expected on the day, too.

In other recent news, a NAFTA framework deal has been agreed between the United States, Canada and Mexico, which revamps the free trade agreement after a year or so of negotiations. Moreover, there was agreement between parties to allow US farmers more access to Canada’s dairy market and concerns about potential US auto tariffs were suitably addressed. So far, it hasn’t had too much of an impact on the value of the dollar index.

Data wise, it’s a busy week for the US, with ISM Manufacturing PMI, ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI and Average Hourly Earnings + Non-Farm Employment all due for release.


EUR/USD fell below 1.16 on Friday as Italy’s coalition government announced budget plans that would push its deficit to three times the size of its spending gap, sending the country on a potential collision course with the EU. Italian government bonds dropped, bank stocks were sold off and the yield on Italian debt rose to 3.2% on Friday as a result.


Italy will likely continue to be the focus for euro traders this week. There isn’t much by way of economic data due, with the exception of European PMIs. It’s a bank holiday in Germany on Wednesday, too.


It was a public holiday in Australia and China on Monday, and so we haven’t seen much action in the AUD/USD pair overnight. It opens at .7220 in London, having remained well supported above the .72 figure since Friday.

The RBA is due to make their monetary policy announcement tomorrow, albeit no change in rates and/or little change in the accompanying statement is expected. The central bank may make reference to the decision by many Australian retail banks to raise mortgage rates recently, but that’s about it. To this point, AUD/USD will likely continue to take its lead from offshore risk events.


The CAD advanced overnight following news that a new framework for a NAFTA deal had been agreed. It’s being called the United States-Mexico-Canada Agreement (USMCA) – see some of the details above. USD/CAD opens towards the very bottom of its very wide recent range this morning. Trading at 1.3020 this time on Friday, it’s now down and close to making a break below 1.28.

The deal will likely keep the loonie well supported into the start of this week. Later on in the week, attentions will no doubt turn to employment data both from the US and Canada – and released at the same time – on Friday.


NZD/USD has tracked the AUD/USD over the last few trading sessions. After spiking to .6638 on Friday, around the time of the London fix, it’s fallen back to open in Europe at .6605, just about hanging on to the .66 figure. Just like the aussie dollar, the kiwi is likely to take its lead from offshore risk events this week, rather than local data.

Expected Ranges

  • GBP/USD: 1.3000 - 1.3090 ▼
  • GBP/EUR: 1.1200 - 1.1310 ▼
  • GBP/AUD: 1.8000 - 1.8100 ▼
  • GBP/CAD: 1.6650 - 1.6780 ▼
  • GBP/NZD: 1.9680 - 1.9800 ▼