IFX Market Report: Thursday 10th September 2020

After an interesting session for price action yesterday, the markets focus stays on the UK and Europe, as we have an emergency Brexit meeting here in London, and the latest rate decision from the ECB.

As negotiations between Lord David Frost and Michel Barnier continue, Cabinet Office Minister Michael Gove will meet EU official Maros Sefcovic in London to discuss how the development could affect Ireland. The source of the EU’s concern is that the government’s Internal Market Bill addresses the so-called Northern Ireland Protocol, which is an element of the withdrawal agreement designed to prevent a hard border returning to the island of Ireland. The bill proposes no new checks on goods moving from the Northern Ireland to Great Britain. It gives UK ministers power to modify or “disapply” rules relating to the movement of goods that will come into force from 1st January, if the UK and EU are unable to come to terms on a deal.

Boris’ bill was the main catalyst of volatility in the pound yesterday. Cable dropped into the 1.29 territory yesterday because of the bill being published. Shortly after however, when Brussels responded to the bill noting that they would not give up talks, the pair managed to climb back above 1.30. At the open yesterday cable started trading at 1.2944, and after a volatile day, finally settled at 1.3010.

As for GBPEUR, the pair also took a tumble as a result of the Internal Market Bill but was able to bounce back before the close. The pair opened the session at 1.0994, before closing off at 1.1016.

EURUSD, after starting the session in the 1.17’s at 1.1772, the pair was able to reach 1.18, closing off at 1.1809.

On the data front, all eyes are on the ECB as they prepare to give their latest Interest Rate Decision. Rates are expected to be left on hold, but reports suggest that the ECB’s new forecast will convey more confidence in the recovery, despite rising COVID-19 cases in Europe. Following the ECB’s Rate Decision and Press Conference, we have the weekly US Jobs report. Continuing Jobless Clams and Initial Jobless Claims are both forecasted to contract from last months reading.

Older posts
Newer posts