Crucial day for the pound as May faces cabinet showdown

Key Movers

A stronger pound and euro dragged on the greenback yesterday as positive Brexit headlines dominated. The US dollar index which measures the performance of the dollar vs. a basket of currencies, was sold off in the European session, dropping 0.5% on the day, trading to an intraday low of 97.10.

Positive trade talks resumed between the United States and China, led by Treasury Secretary Steven Mnuchin, which also weighed on the greenback as market participants flooded back into riskier based currencies.

Little came from FOMC members Lael Brainard as the market now focuses its attention on a US core inflation figures for the month of October.


The euro suffered yesterday as the Brexit chaos in the UK saw the likelihood of a no deal scenario between the UK and EU rise. EUR/USD rapidly dropped from around 1.1350 to a low of 1.1270 before recouping these losses throughout the American/Asian sessions. European Central Bank chief, Mario Draghi has been speaking this morning in Frankfurt where he has highlighted the slowdown in growth seen over recent months in the Eurozone. Despite this markets still expect a rate hike sometime in the second half of 2019. The pounds performance yesterday against the euro was just as terrible as against was against the dollar with GBP/EUR falling from around 1.1490 to close to 1.1250.


Events in London saw AUD/USD slip during the start of the European session however it recouped these losses throughout the day. The next event of note on the horizon from Australia is the release of the latest Monetary Policy Meeting Minutes due Monday night. Current expectations are that the Reserve Bank of Australia will keep interest rates on hold deep into 2019. Given the concerns over the health of the Chinese economy on the back of US President, Donald Trump’s trade offensive it’s unlikely we will see much of a hawkish message from the RBA given the impact Trumps tariffs have had on Australia’s biggest trading partner. GBP/AUD has plummeted to 1.7590.


USD/CAD trades back below 1.32 this morning as yesterday’s risk off trade hit commodity currencies. Todays one release of note is Manufacturing Sales m/m with a modest increase of 0.1% predicted. GBP/CAD trades at 1.6840.


NZD/USD is clinging on to the .68 handle despite the political upheaval on the other side of the globe. The recent strong unemployment number from NZ has been supportive of the kiwi helping it gain around four cents against the greenback over the past month. GBP/NZD is down to 1.8790.