IFX Market Report: Wednesday 11th September 2019

The pound was largely unchanged on Tuesday as investors avoided any heavy betting until there was further clarity on whether the UK could still be leaving the EU on the 31st of October without a withdrawal agreement in place.

Though legislation has passed forcing the Prime Minister to request an extension, there is still some uncertainty caused by his insistence that he will refuse to do this and still aims to leave the EU by the current deadline. This could be through agreeing a new withdrawal agreement which Johnson has also said remains possible. Parliament is now closed until 14th October.

The pound is likely to remain unmoved until there is any further information on the outcome of Brexit deliberation, and economic data is not likely to have much effect. Average earnings in the UK rose by 4% year-on-year three months to July, higher than expected and compared to the 3.7% in June but some investors chose to ignore this news.

GBPUSD opened at a brief low of 1.2318 and rose to a high of 1.2369 before dropping down across the afternoon to close at 1.2342

GBPEUR opened at 1.1154 and rose to a high of 1.1201 before dropping down to close at 1.1180

The US dollar was steady against the euro Tuesday, investors are waiting for the European Central Bank meeting tomorrow where interest rates are expected to be cut alongside other stimulus measures. The dollar was little changed against the euro. Some analysts are focused on Germany’s ability to counter a crisis in the eurozone by injecting “many billions” of euros into the economy.

Demand for the safe-haven currency has also dropped since further talks have been scheduled in October between China and the US. The Japanese yen weakened to its lowest level against the greenback since August 2nd. Investors are still waiting for key US economic data tomorrow and Friday regarding inflation and retail sales.

EURUSD opened at 1.1043 and remained steady across the day, closing almost unchanged at 1.1039

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