IFX Market Report: Tuesday 8th October 2019

The pound lost ground on Monday as it became clear that the EU and the UK are still far from reaching a deal. The pound fell 0.1% against the dollar and was down 0.3% against the euro. Some analysts rate Boris Johnson’s chances of getting a deal before the EU summit on 17th-18th October at only 10-15%. He is required by law to ask for an extension, but some media reports indicate he is planning to challenge this law in the supreme court.

Investors have conflicting views as to whether sterling will make gains or losses in the short term, choosing between political uncertainty or the receding risk of a no-deal Brexit. Economic data has recently been disappointing indicating the impact that Brexit uncertainty is having on the economy.

GBPUSD opened at 1.2306 and reached a midday high of 1.2329 before sliding again in the afternoon, closing at 1.2313 and hitting a late evening low of 1.2288

GBPEUR opened at 1.1217 and was steady for most of the day, closing little changed at 1.1212

The dollar edged higher against a basket of currencies on Monday as investors kept a keen eye on trade-talk to look for clues as to how they were progressing. The chances of a deal appear low and the so risk appetite was minimal, boosting the dollar index 0.17%. The tone of the trade talks has softened with both sides showing willing to reach an agreement. The dollar gained 0.36% against the Japanese yen.

The US Federal Open Market Committee’s minutes are also due tomorrow and may indicate clues on whether the Fed will cut rates at its October meeting.

Elsewhere the Turkish lira fell to a one-month low against the dollar as reports circulated that the Turkish government are planning incursions into Northern Syria whilst US President Donald Trump warned that he could “obliterate” the Turkish economy. The White House indicated it would not be supporting the Turkish government’s actions; the lira fell 2% at one point against the dollar.

EURUSD opened at 1.0971 and climbed to an afternoon high of 1.0996 before dropping to close at 1.0982

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