The pound made slight gains on Monday, despite data showing the UK economy contracted at a 0.2% quarterly rate. The pound largely ignored this data in favour of Brexit news. This was the first rise for the pound in four days, gaining 0.8% against the euro at one point but a more modest 0.1% against the dollar. Prime Minister Boris Johnson is due to unveil proposals for a new withdrawal agreement between the UK and the EU today.
He is still insistent that the UK will be leaving on the 31st of October, putting downward pressure on the pound as investors worry, he may find a way to avoid the legislation forcing him to ask for an extension. A vote of no confidence from opposition parties now looks unlikely whilst they are unable to agree on who should lead the care-taker government, with the Conservative party rebels and others refusing to back the leader of the opposition.
GBPUSD opened at 1.2301 and made slight gains across the day, reaching an afternoon high of 1.2329. Later these gains were erased as the pair closed almost unchanged but later hit a low of 1.2282
GBPEUR opened at 1.1249 and made sharper gains to reach a high of 1.1306 before settling to close at 1.1270
The euro fell to its lowest in 30 months against the US dollar as economic growth concerns continue to bring down the single currency. Germany’s economic institutes have lowered their growth forecasts based on a recession in the manufacturing sector. The euro fell 0.36% against the dollar.
The blame for the slowing global growth has been placed on the trade conflicts between the US and China. The Trump administration is considering delisting Chinese companies from US stock exchanges. Washington and China will next hold talks on the 10th and 11th of October. President Trump has escalated attacks against the lawmaker leading the impeachment inquiry against him.
Elsewhere the New Zealand dollar fell to a four-year low against the greenback after surveys showing weakening business sentiment strengthened the case for a reduction in interest rates.
EURUSD opened at 1.0934 and took sharp losses in the morning, hitting a low of 1.0889 before recovering slightly to close at 1.0905
