IFX Market Report: Friday 27th September 2019

The pound recovered some of its losses yesterday as month-end rebalancing caused the pound to gain 0.1% against the dollar. Investors are awaiting further developments from parliament as opposition leaders gather to discuss strategy going forward. Against the euro the pound gained 0.2%. The EU chief negotiator Michel Barnier has said the UK is yet to come up with any “legal and operational” proposals for a withdrawal agreement.

Analysts are firm in their view that an early election looks inevitable before the end of the year. The rebalancing of effect has meant sterling held at its 1.2290-1.2300 support level, but most investors have begun adjusting portfolios to allow for large swings in the pound in either direction.

GBPUSD opened at 1.2342 and fell to a morning low of 1.2315 before recovering these losses and remaining stable in the afternoon. Closing at 1.2346

GBPEUR opened at 1.1278 and reached a morning low of 1.1260 and a more volatile afternoon saw the pair close higher at 1.1292

The dollar hit a three-week high against a basket of currencies on Thursday as the US money markets experienced tightened liquidity. Political tensions and concerns about economic outlook weighed on other currencies. The dollar index gained 0.16%, its highest since September 3rd. Despite the uncertainty created by the impeachment talks currently going on, the US dollar continues to hold its place as the major safe haven.

Elsewhere the New Zealand dollar gained 0.46% against its US rival after the central bank governor said he it would be unlikely to use unconventional monetary policy. The euro was 0.18% lower against the dollar as its economic outlook is becoming increasingly negative, with some analysts predicting a recession.

EURUSD opened at 1.0943 and climbed to a brief high of 1.0965 before dropping back down across the afternoon to close lower at 1.0923

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