IFX Market Report: Tuesday 24th September 2019

The pound was stable on Monday as investors were searching for signs of progress in the Brexit negotiations as well as waiting for a Supreme Court ruling on whether Prime Minister Boris Johnson misled Her Majesty the Queen on his reasons for suspending parliament. Critics have said this move was an attempt to stop parliament from preventing the UK from leaving the EU.

A ruling against the government would increase political uncertainty and possibly cause the pound to fall slightly, already under pressure from the collapse of British travel giant Thomas Cook. Some analysts believe the pound will trade close to $1.23 in the case of a ruling against the government. Yesterday, the pound was down around 0.3% against the dollar in the afternoon but flat against the euro.

GBPUSD opened at 1.2430 having fallen sharply to a low of 1.2419 in the afternoon and then closing at 1.2426

GBPEUR opened 1.1325 and fell to an early afternoon low of 1.1302, before stabilising for the rest of the day, closing slightly higher at 1.1312

The dollar index gained 0.1% yesterday and made gains against the euro as the poor economic data about European manufacturing and services caused further concerns about, the state of the eurozone economy. Specifically, in Germany, the manufacturing recession deepened unexpectedly. The euro was 0.22% lower against the dollar.

US employment in the services sector shrank however manufacturing activity rose in September, beating expectations. The dollar is holding up well in recent months as investors are attracted to the strength of the US economy.

EURUSD opened at 1.0976 having fallen sharply in early trading on the data release. It spent the rest of the day recovering lost ground to close at 1.0987

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