IFX Market Report: Wednesday 28th August 2019

The pound rose on Tuesday as opposition parties have begun to rally in order to prevent a no-deal Brexit on October 31st. These plans may well be interrupted by Prime Minister Boris Johnson announcing that he will close parliament only five days after MPs return from recess. This would make it unlikely that any opposition could change the laws to prevent a no-deal. The pound had risen as much as 0.7% yesterday but this morning these gains have been erased after the announcement.

The concerns around the pound are largely unchanged, with the thought of a weakened economy disrupted trade flow causing downward pressure and preventing any heavy buying. Some analysts still believe the no-deal scenario will be avoided and therefore the pound is undervalued but opinion among banks is increasingly split.

GBPUSD opened at 1.2242 and rose steadily to close at a high of 1.2296. This morning after Boris Johnson’s announcement, the pound fell sharply to 1.2193

GBPEUR opened at 1.1021 and followed a similar pattern, closing at 1.1082 and then falling this morning to 1.0996

The dollar fell against safe-haven currencies on Tuesday as investors were once again cautious about trade tensions. The Japanese yen gained 0.34% against the dollar. Trade tensions have caused it to rise 3.54% this year. Concerns were raised when a Chinese Foreign Ministry spokesman said he was unaware of any phone calls despite the US Trade Secretary claiming there had been contact between the two sides.

The euro was trading lower against the dollar but had made gains on the hope that a snap election could be avoided in Italy by the arrangement of a new government.

EURUSD was largely unchanged yesterday, opening at 1.1108 and dropping slightly across the day, closing at 1.1096

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