The pound fell slightly on Friday after the European Union approved an extension to the Brexit deadline but did not specify a date. Meanwhile UK parliament failed to agree whether to hold a general election. The pound was trading 0.2% lower against the dollar and rumours that French President Emmanuel Macron did not wish to allow an extension, and if one was approved that it only be a short technical extension to allow the withdrawal agreement to be approved.
This morning the EU has decided to grant the UK an extension until the 31st of January, which may well give opposition parties enough assurance to allow a general election to take place before that time. The pound had fallen 1.2% in the last week but jumped this morning on the news of a long extension. The fears of a no deal will likely have subsided further but new currency swings will come from news regarding when an election will take place and how the polls are looking up until that time.
MPs will vote this evening around 17:00 on whether to approve the government’s proposal of a 12th December election.
GBPUSD opened at 1.2840 and reached a low of 1.2812 by the afternoon and closed just above that at 1.2819. This morning the pair reach a high of 1.2854
GBPEUR opened at 1.1554 and having fallen to a low of 1.1537 close to midday, it recovered these losses in the afternoon to close at a high of 1.1573. This morning the pair reach a high of 1.1586
The dollar made gains on Friday as US and Chinese trade negotiations neared the end of the Phase 1 trade pact. The dollar index gained 0.2% by the afternoon. Although trade talks have dominated the FX market in recent months, there will be some shift towards the US Federal Reserve’s policy meeting. The Fed is largely expected to announce a rate cut on the 30th of October, the third of this year, likely to be another 0.25% reduction.
Against the euro, the dollar was 0.21% higher but the single currency benefitted this morning from news of a longer Brexit extension deadline
EURUSD opened at 1.1114 and after a brief rise in the morning, fell steadily across the day to reach a low of 1.1075 at closing
