- GBP/USD testing the bull’s commitments at 1.22 the figure having travelled lower from a high of 1.2291.
- Brexit negotiations continue to drive the Pound, but the immediate focus turns to UK data.
GBP/USD testing the bull’s commitments at 1.22 the figure having travelled lower from a high of 1.2291 to a low of 1.2197, trading at 1.2200 at the time of writing, -0.15% on the day so far. Indeed, Brexit continues to weigh as uncertainty over the UK economy and pound, but at the same time, the US dollar is strong in its own right.
Brexit negotiations continue to drive the Pound, although there is going to be a keener focus on the UK data this week as investors weigh the prospects of not only the uncertainty which Brexit brings but also as to how the Bank of England will fair throughout the proceedings and while monitoring the economic outlook for the UK economy.
Indeed, investors are likely to be drawn by tomorrow’s releases of UK August production data and monthly GDP. Recent weakness in UK PMI data have reinjected fears that recessionary conditions could be building in the UK. “Even if tomorrow’s data releases do not enhance the clouds hanging over the UK economy, slowing global growth and domestic political uncertainty will ensure that GBP remains vulnerable,” analysts at Rabobank argued.
The latest on Brexit shenanigans
Meanwhile, the latest on Brexit shenanigans is that despite the existent of the Benn Act, which is designed to force the PM to request a Brexit delay if a deal is not in place or if MPs have agreed to a no deal exit, the PM has indicated that he still wants the UK to leave the EU on October 31. “Not to do so would risk losing potentially thousands of Tory voters to the Brexit party. This may at least partly explain the ratcheting up of rhetoric and the casting of blame,” analysts at Rabobank explained.
FOMC minutes on the cards
The minutes from the September FOMC will be in focus today and scrutinized by the markets seeking some clarity on the Fed’s thinking for the way forward following the Fed’s decision to ease rates again at that meeting. “More importantly, the minutes are also likely to shed light on the Fed’s thinking about the recent surges in repo market rates. However, this has been partly addressed by Chair Powell, who stated on Tuesday that the Fed “will soon announce measures to add to the supply of reserves over time,”” analysts at TD Securities explained.