Sterling slips ahead of parliament’s return
Friday 30 August, 2019
Daily Currency UpdateGBP - British PoundThe pound is drifting lower this morning as tensions mount re: what could be in store next week when parliament returns. Sterling has been on a roller-coaster ride recently with warm comments from Angela Merkel re: Brexit seeing the pound push higher last week before the move being undone by the announcement that Prime Minister, Boris Johnson had prorogued parliament, bringing an end to the current session sometime between the 9th and 12th September before a state opening on the 14th October. The controversial move has been condemned far and wide by remainers and those looking for more time to get a deal done with the EU. It was expected that an appeal to cancel the usual recess for the political conferences would be granted by the Speaker of the House, John Bercow however even allowing for that recess time there are now less sitting days in the house before the Halloween Brexit deadline. In response, Boris Johnson has said representatives of the UK and EU will meet twice weekly, instead of the usual once however anything agreed between the two sides has to be rubber stamped in parliament meaning this will likely be going down to the wire (again). The commons first sitting day on Tuesday should be lively to say the least and the sterling will likely whip around on events from Westminster as opponents to Johnson attempt to block the prorogation with call of no-confidence in the armoury of Labour leader Jeremy Corbyn. GBP/USD sits at 1.2180 with GBP/EUR holding steady around 1.1025.
Key MoversThe second reading of US Q2 GDP came in on target yesterday printing 2% y/y showing a slight downward revision from the first estimate of 2.1%. There have been little by the way of fresh developments re: US/China trade with equity markets breathing a sigh of relief with most European and Asian bourses rising. USD/JPY is also higher, up to around the 106.50 handle and gold has slipped a touch heading back towards $1500 an Oz.Down Under there was more bad data with Building Approvals showing -9.7% m/m when a flat reading was eyed. Today's main focus will be Eurozone inflation with the preliminary/flash estimate for August expected to hold at 1%. Yesterday's German monthly reading showed a bigger than expected drop of -0.2% causing the euro to slide. EUR/USD is drifting back towards the 1.10 handle as markets await the next monetary policy decision from the European Central Bank on the 12th September. Action could be taken to stave off a stagnation in the bloc in the face of Germany teetering on a recession, ongoing trade tensions and persistently under target inflation.
- GBP/USD: 1.21 - 1.2230 ▼
- GBP/EUR: 1.0960 - 1.1090 ▲
- GBP/AUD: 1.8050 - 1.8225 ▲
- GBP/NZD: 1.9255 - 1.9415 ▲
- GBP/CAD: 1.6140 - 1.6295 ▲