As Sterling remains steady, upside gains are capped by the continued uncertainty of an agreed post-Brexit trade deal. The Pound has managed to maintain itself above 1.30 against the U.S. Dollar, and above 1.10 against the EUR as we approach closer to the ‘Halloween deadline’.
With markets cautious of the next Brexit update, GBPUSD’s performance was rather flat yesterday, trading within a very narrow range. The pair opened the session at 1.3017 and closed just a fraction above at 1.3022.
Similarly, GBPEUR also saw limited price action on Monday. Opening at 1.1013, the pair closed one pip above at 1.1014.
There has been little reported from this week’s discussions on Brexit, albeit a few mumbles and rumours. As both territories hope to be coming soon to a successful conclusion of talks, the main issue still appears to be France and their fishing demands. Following President Macron’s comments on the issue, Michel Barnier last week noted that moving forward he “is only worried about fish” and it has been noted that German Chancellor Angela Merkel may have to intervene to get the French to ease their position. A UK Government source told The Telegraph “we are relatively optimistic but that doesn’t mean it won’t end in tears. Fisheries is the biggest thing. We are hoping Merkel can unlock Macron on fisheries”.
EURUSD lost some momentum yesterday, almost slipping into the 1.17’s. The pair opened at 1.1819 and dipped during the day, going as low at 1.1803. As the day progressed the pair was able to retrace its losses and close Monday at 1.1823.
EUR weakness yesterday was driven the rising number of COVID-19 infection cases in Europe. After a record-breaking weekend for France reaching over 52,000 new cases on Sunday, infections in Spain, Italy, Germany, and plethora of other EU territories, are rapidly increasing. As France decides whether to expand its night time curfews, already in place in Paris and other cities, Angela Merkel, in an address to the German people, asserted that the “difficult months are coming” and her government is preparing for a “lockdown light”.
On the data front – again another quiet day for economic releases. At 12:30 we have Septembers US Durable Goods Orders, and at 14:00 we have US CB Consumer Confidence.
