IFX Market Report: Tuesday 8th September 2020

Monday proved to be another tough day for the pound, as fears of a no-deal Brexit escalated. After PM Boris Johnson said on Sunday that a no-deal departure from the EU would be a “good outcome”, Michel Barnier and David Frost sit down in London today to continue negotiations.

Lord Frost noted that “today, I will sit down with Michel Barnier and drive home our clear message that we must make progress this week if we are to reach an agreement in time… we have now been talking for six months and can no longer afford to go over well-trodden ground. We need to see more realism from the EU about our status as an independent country.”

In regard to trade, Frost claims he will reinforce the UK’s “simple, reasonable request for a free trade agreement… if they can’t do that in the very limited time we have left then we will be trading on terms like those the EU has with Australia”.

Despite the lack of progress and negativity surrounding the negotiations, Frost said that “there is still time to reach a good agreement and I look forward to this week’s face-to-face negotiations where I hope progress can be made.”

After opening in the high 1.32’s at the beginning of the week, cable has struggled with the markets growing no-deal fears. The pair opened the session yesterday trading at 1.3222, before deprecating throughout the day, closing off at 1.3161.

GBPEUR in contrast held relatively steady amidst the news from negotiations. The pair opened the session at 1.1168, before closing off the day at 1.1137.

As for EURUSD, after a volatile week last week, has shown little price action of late. The pair opened the session at 1.1839, before closing just slightly below at 1.1818.

On the data front, at 07:00 we had the Balance of Trade for July from Germany, coming in better than expected at €19.2B, forecasted at €15.6B. At 10:00 we have the Q2 3rd Estimate GDP Growth from the Eurozone, followed by July’s Consumer Credit Change from the US.

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