Home Daily Commentaries US bases hit as Iran strikes back

US bases hit as Iran strikes back

Daily Currency Update

GBP - British PoundGBP/USD continues to trade between 1.31 and 1.32 ahead of today's meeting between PM Boris Johnson, new EU Commission President Ursula von der Leyen and EU chief negotiator Michel Barnier at 10 Downing St. The three are due to discuss the future trading relationship between the UK and the EU which Johnson wants completed by the end of the year. The 11 month target seems ambitious given the length of time it has taken the bloc to complete trade deals with other countries. Given regulations are already more aligned it isn't completely out of the question that this target can be met. Comments this afternoon after the meeting as well as the tone of a speech by Mrs von der Leyen at the London School of Economics will be scrutinised by sterling traders today to see if the EU sees a deal being signed off by year end as do-able.In parliament it looks like BoJo's withdrawal agreement should sail through after all three votes on it were won yesterday. It should be rubber stamped in the next couple of weeks meaning the UK will finally depart the EU on 31st January, three and half years after the 2016 referendum. GBP/USD currently sits at 1.3150 with GBP/EUR just breaking above 1.18.

Key Movers

Tensions continue to sizzle between the US and Iran as last night saw US targets in Iraq bombed by its arch-foe. Iranian missiles hit US airbases in Irbil and Al Asad just outside of Baghdad with it the number of casualties, if any, unclear at present. Iranian Foreign Minister Javad Zarif took to Twitter after the attack to exclaim: "Iran took & concluded proportionate measures in self-defense under Article 51 of UN Charter targeting base from which cowardly armed attack against our citizens & senior officials were launched. We do not seek escalation or war, but will defend ourselves against any aggression."Hopes are that this may draw an end to the matter for the time being however a lot will depend on US President's response to the attack today. Before finishing up yesterday Trump tweeted: "All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning." Should the attack have seen no US casualties then that may be it for the time being. However should any US personnel have been killed then we may see more aggression from the States. The funeral of the general who's assassination initiated this situation took place yesterday with around 50 people killed in a stampede at Qasem Soleimanis hometown of Kerman. The whole situation continues to dominate market movements with most stock markets lower again today. Gold continues to trade near seven year highs and the yen and swissy remaining well bid. USD/JPY plunged to 107.65 overnight before recovering to around 108.45 at present as markets digest the situation and hopes are that we have seen an end to immediate hostilities. Away from the conflict, Eurozone inflation rallied up to 1.3% y/y as expected pushed higher by rising food prices. Further upward pressure may be added should oil remain elevated however the tensions in the Middle East are likely to do little for business confidence and investment, especially when combined with the ongoing US/China trade standoff. EUR/USD trades at 1.1135

Expected Ranges

  • GBP/USD: 1.3080 - 1.3220 ▼
  • GBP/EUR: 1.1740 - 1.1850 ▼
  • GBP/AUD: 1.9070 - 1.9220 ▲
  • GBP/NZD: 1.9680 - 1.9840 ▼
  • GBP/CAD: 1.7030 - 1.7160 ▲