IFX Market Report: Friday 2nd October 2020

As another week comes to a close, sterling has rallied this morning on the hopes that London and Brussels are coming closer to securing a Brexit trade deal between the EU and UK. The British pound has been volatile this week, with Brexit headlines and remarks from BOE policy makers being the main dictators of its performance.

Yesterday, starting off the session at 1.2937, cable quickly plummeted into the 1.28’s and struggled throughout the rest of the day. Despite finding the resilience to get back to the 1.29 handle late in the session, GBPUSD eventually closed off the trading day a slither below that mark at 1.2897.

Thursday also proved to be a tempestuous trading session for GBPEUR. While opening at 1.1020 at the start of the day, the pair quickly lost its grip and fell into the 1.09’s. In the early afternoon it was able to slowly claw back up to 1.10, sustain itself for a few hours, before eventually closing at 1.0975.

In reaction to the positive Brexit potential, this morning cable is back to 1.29, and against the euro, sterling is at 1.10. This morning’s confirmation from President of the European Commission Ursula von der Leyen, that a phone call will take place tomorrow between herself and Boris Johnson is the reason for the pounds advance. She noted that “stock-taking of negotiations and discussion of next steps” will be the priority of her agenda to discuss with the Prime Minister.

While the sterling price-action is currently the limelight of the markets, EURUSD’s streak of minor activity has continued. Thursday saw the pair open at 1.1739, before closing the day a fraction above, at 1.1751.

On the data front, this morning we have Core Inflation Rate YoY Flash for the Eurozone at 10:00, expected to come in at 0.5%, with a previous of 0.4%. In the afternoon we have the highly anticipated Non-Farm Payroll figures from the US. The headline figure is forecasted to indicate a further 850K jobs were added to the US economy for the month of September. With the US’ September Unemployment Rate also set to be released at 8.2% this afternoon – we could see dollar volatility dependant on how the market react to the actual figures.

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