The pound was largely unchanged on Wednesday after it was finally confirmed that the UK would be having a general election on the 12th of December after the EU confirmed a delay to the Brexit deadline until January 31st. Though the fears of a no-deal exit have receded, the pounds movements were limited by the large value of options expiring on October 31st, the original Brexit deadline.
The apparent support for the Conservative party in the polls, as compared to a lack of support for the opposition Labour party, will have a stabilising effect on the pound. A Conservative Party win in these elections would mean a Brexit deal ratified. However, it remains unclear whether a divided electorate will provide a clear direction for any specific path on Brexit.
GBPUSD opened at 1.2891 and gained in the morning to reach a high of 1.2896 before falling back to close at 1.2873
GBPEUR opened at 1.1591 and followed a similar pattern, reaching a high of 1.1605 before falling to close at 1.1576
The dollar fell against a basket of currencies yesterday after the Federal Reserve cut interest rates for the third time this year but signalled that this cycle of rate-cutting would be paused. This was largely in line with market expectations. The dollar index fell 0.16% after Chairman Jerome Powell spoke. Payroll data being released tomorrow is the next major focus for the US economy.
Optimism for a trade deal between the US and China continues to boost risk appetite however the dollar took a slight hit yesterday as Chile decided to withdraw as hosts of the APEC trade summit where it was expected that China and the US would make major steps to ending trade tensions.
EURUSD opened at 1.1121 and despite dipping to a low of 1.1105 in the middle of the day, it closed unchanged from where it started