IFX Market Report: Thursday 27th June 2019

The pound had mixed day yesterday, ending the session marginally up against the US dollar, but dropping to a fresh 5 ½-month low against the euro.

Front runner to take over as UK Prime Minister Boris Johnson, softened his Brexit stance slightly by saying at a Conservative leadership event there was a “million to one” chance he would lead the UK into a disorderly exit from the European Union. However, this comes just a day after his “Do or die. Come what may” comments and an interview with the BBC that said he was serious about leaving the EU without a deal if the EU refused to negotiate a new exit agreement.

Bank of England Governor Mark Carney said it would only cut its economic forecasts to reflect the risk of a no-deal Brexit if Britain’s next prime minister makes leaving the European Union without a transition agreement his preferred policy.

Some analysts believe that the UK is heading for a Brexit "showdown"; either a no-deal exit, a general election or a second referendum. Sterling is likely to come under downward pressure between now and then if the odds of a chaotic no deal start to rise.

GBPUSD opened at 1.2665 and rose to a high of 1.2701 during the course of the morning, after falling back in the afternoon, the pound recovered again and touched 1.2700 just after the London session finished.

GBPEUR started the day falling to a low of 1.1143, as the day continued the pound recovered but later in the session all the gains were wiped out as it dropped back to 1.1144.

The dollar recovered slightly against a basket of currencies on Wednesday as the Federal Reserve indicated an interest rate drop next month may not be a warranted course of action. The last 2 weeks has seen the dollar slide as investors were certain the Fed would introduce a programme of rate cuts in the second half of the year.

Both the dollar and the euro strengthened against the safe-haven yen, each about 0.6%, after comments from US Treasury Secretary Steve Mnuchin where he said a trade deal with China was "90% complete". These comments were not enough to completely dispel fears of what might happen at the G20 summit meeting between President Donald Trump and President Xi Jinping.

EURUSD opened at 1.1365 and held steady for most of the day, but briefly hit a of 1.1385 in the afternoon.

Elsewhere Bitcoin continued its meteoric rise a further 16% against the dollar, its highest level since January. This has primarily been brought about by Facebook's announcement to introduce its own digital currency, Libra, leading markets to believe the use of crypto currencies is expanding.

Older posts
Newer posts