IFX Market Report: Friday 23rd October 2020

On Wednesday, when the news was released that the UK and EU were to restart stalled Brexit trade negotiations, the Pound spiked, managing to reach the 1.31 range against the US Dollar and testing the 1.11 handle against the Euro. However, as we approach Friday’s open the Pound has retracted some of these gains, suggesting that the market remains cautious of any ‘negative’ news regarding progress of a post-Brexit trade deal.

Thursday’s session saw GBPUSD start strong trading at the 1.3143 level. But in spite of it’s strong start the pair lost momentum throughout the day and closed off at 1.3086

As for GBPEUR, despite depreciating somewhat during the session, the pair was able to sustain itself in the 1.10’s. The pair opened the day at 1.1081 and closed off at 1.1069.

When Michel Barnier noted on Wednesday that “both sides are willing to work constructively, if both sides are willing to compromise, and if we're able to make progress in the next few days on the basis of legal text”, markets became increasing optimistic market’s saw Sterling strength across the board.

Despite these comments, Barnier has said that he is not “worried about anything else but fish” moving forward. He went on to add that “fish is now the thing to tackle. The other elements seem doable, more or less”. Fishing has proved to be a sticking point for trade negotiation progress, despite the industry only accounting for a minuscule portion of both economies. At the recent EU Summit President Macron was most vocal about the issue, asserting that “I want to be clear: this deal will not be made at any price. If these conditions are not met, it’s possible there won’t be a deal. We are ready for that. France is ready for that… we are ready for a no-deal.”

EURUSD traded comfortably in the 1.18 range yesterday. The pair opened the day at 1.1860 and finished the session at 1.1822.

On the data front, at 07:00 we had UK Retail Sales come out better than expected, with a YoY headline figure of 4.7%, forecasted at 3.7%. We also have the Markit PMI readings from both Germany and Eurozone at 08:30 and 09:00. Following that we have Markit PMI report from the UK at 09:30, then at 14:45 we have Markit Manufacturing PMI from the US.

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