As we come to the close of a turbulent September, the final ‘scheduled’ phase of Brexit negotiations will begin on Tuesday. Since the start of the month, sterling has depreciated by over 2% against the euro, and 4% against the US dollar.
On Friday we saw cable fall even further and keep itself afloat just above the 1.27 handle. At the open GBPUSD was trading at 1.2793; but as more detrimental news on Brexit was leaked throughout the day, the pair closed off the session at 1.2706.
As for GBPEUR, albeit the pair’s decline was not as steep as with cable – opening at 1.0952 and closing at 1.0934 meant the sterling still managed to gain ground against the single currency.
Ahead of official trade talks tomorrow, today Chancellor of the Duchy of Lancaster Michael Gove is travelling to Brussels to meet with European Commission President Maros Sefcovic to discuss the implementation of the upcoming Brexit divorce deal. It was noted by the EU’s Head of Task Force for Relations with UK, Michel Barnier, that he is neither optimistic nor pessimistic, but “determined to reach a deal”.
In regard to EURUSD, last week we saw one of the pair’s steepest declines of the year. On Friday the pair opened the session at 1.1683, and despite dollar demand throughout the day, the pair showed some resilience and managed to sustain itself somewhat during the session, closing off the week at 1.1621.
Despite the dollar gaining some ground of late, it is likely any further greenback gains will be capped as worries about the lack of any further fiscal stimulus and political uncertainty in the run-up to the November 3rd presidential election persist.
On the data front, it is a quiet start to the week, with ECB President Lagarde speech being the only event of note.