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Pound struggles as Brexit talks fail

business-articlesPound struggles as Brexit talks fail
  • Collapse of Brexit talks fuels pound losses 
  • Euro recovers ground ahead of ECB minutes
  • Risk of imminent Fed interest rate cut keeps US dollar under pressure
 
Pound softens, are further losses ahead? 
 
Confirmation that Brexit talks had stalled saw the pound come under increased pressure yesterday as the risk of a no-deal scenario rose. 
 
A renewed sense of political anxiety and economic uncertainty cast a shadow over GBP exchange rates, with investors still wary of the possibility of the UK crashing out of the EU at the end of the month.
 
Further losses could be in store for the pound this morning as markets anticipate stagnation from August’s monthly gross domestic product reading.
 
With confidence in the outlook of the UK economy already limited, any fresh slowdown in domestic growth is likely to weigh heavily on GBP exchange rates.
 
 
Euro recovers before ECB minutes 
 
In the absence of any fresh Eurozone data the euro was able to recover some of its recent losses on Wednesday.
 
Although concerns over the underlying health of the German economy remain, this failed to keep the single currency under pressure.
 
However, the appeal of the euro could diminish sharply if the latest European Central Bank (ECB) meeting minutes provide cause for concern. 
 
Indications that the central bank is planning to ease monetary policy further in the coming months may drag EUR exchange rates lower across the board.
 
 
Signs of inflation uptick may boost US dollar
 
Hopes of a potential breakthrough in US-China trade relations increased risk appetite yesterday and limited the strength of the US dollar.
 
However, the US dollar could find a rallying point this afternoon if September’s consumer price index strengthens as forecast.
 
While CPI is not the Fed’s preferred measure of inflation, evidence of stronger inflationary pressure could still reduce the case for an imminent rate cut, to the benefit of USD exchange rates.
 
 
Upcoming Data:
 
Thursday, 10th October 2019
09:30 GBP Gross Domestic Product
12:30 EUR European Central Bank Meeting Minutes
13:30 USD Consumer Price Index
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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