IFX Market Report: Wednesday 9th September 2020

Increasing risk of a no-deal Brexit continued to weigh heavy on the pound yesterday. GBP was down across the board, markets proving to be hostile as Brexit negotiations slug on.

Along with political uncertainty in the UK, a sudden halt of AstraZeneca vaccine development has pushed cable to below 1.2950 this morning. AstraZeneca’s decision to pause its third phase of COVID-19 vaccine trials has ultimately diminished Health Secretary Matt Hancock’s hopes of attaining a cure by early 2021.

The Internal Market Bill is set to be published today and will detail how powers currently held by the EU will be shared out after the post-Brexit transition period ends. The bill has already sparked much controversy with the permanent secretary to the Government Legal Department, Sir Jonathan Jones, has resigned from his role as a response to the bill. Reason being, Sir Jonathan, the government’s most senior lawyer, believes the bill goes too far in breaching the government’s obligations under international law.

No-deal Brexit fears, coupled with a pickup in dollar demand, we saw cable mark its 5th straight daily decline. The pair opened the session at 1.3133, before declining throughout the day, closing off at 1.3036.

EURUSD also fell into 1.17 territory as the dollar caught a bid. The pair opened just above 1.18 at 1.1806, but was unable to sustain itself, finishing the day off at 1.1788.

As the market becomes increasingly fearful of a no-deal Brexit, GBPEUR dropped down below the 1.11 handle. Starting the day off at 1.1123, the pair quickly deprecated, trading in the 1.10’s, closing the day off finally at 1.1059.

On the data front, nothing of note to be released today. Markets look ahead to Thursday with the ECB giving its latest Interest Rate Decision at 12:45 – the central bank expecting to keep on hold. Following that, as always, the Press Conference at 13:30. Attentions then shift to the US with the latest weekly jobs report. Continuing Jobless Claims is expected to come in at 12925K, while Initial Jobless claims is forecasted at 846K. Then at 18:00 we have a speech from ECB President Christine Lagarde – markets will listen close for any comments on monetary policy or potential rate moves.

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