Daily Currency Update
GBP - British PoundIt was a confusing day for sterling yesterday as it finished the day as one of the strongest of currencies. The pound was mostly buoyed by the extension granted to the UK by the EU27 which will be ratified today if no EU country objects it within 24 hours. So with the pound now relieved that the UK won't be crashing out of the EU at the end of the month, support is rooted around GBP/USD 1.28. Moving forward though the currency's trajectory will be driven by the general election back and forth currently ongoing. Late last night, the Prime Minister failed for the third time to get the 2/3rds majority needed to trigger an early election however he is not expected to wait long to try again.Today the PM is expected to introduce a straightforward one line bill, only requiring a simple majority, to adjust the election date to 12th December. As mentioned, whilst the pound has been buoyed by the Brexit extension uncertainty is still incredibly high. If there are two things that characterise the pound at the moment is high volatility and political uncertainty, and both are set to continue over the next eight weeks.Finally spare a thought for Mark Carney, Bank of England Governor, who was set to step down/retire on 31st January but this now looks unlikely given the Brexit extension.
Whilst Brexit has been parked aside for the time being as mentioned yesterday the focus for the market is now firmly on two other things. Firstly, Trump announced yesterday that a China trade pact could be signed imminently at the APEC meeting in November. This provided the excuse for the market to once again move back towards riskier assets with Asian equities benefiting. Secondly, the Federal Reserve are set to meet on Wednesday and whilst there is a 90% chance of a cut in rates investors will be keeping a close eye on any divisions in the committee once again.
- GBP/USD: 1.2800 - 1.2900 ▼
- GBP/AUD: 1.8730 - 1.8850 ▼
- GBP/NZD: 2.0150 - 2.0260 ▼