Tuesday proved to be a relatively calm session for the G10 foreign exchange market, with little price action in the day, currencies traded relatively flat over the course of the session.
Cable did not move out of its 1.28 range yesterday – opening at 1.2860, the pair closed only 4 pips above the open at 1.2864.
Somewhat of a similar story for GBPEUR, the pair once again rangebound. The pair opened the day at 1.0815, before closing off the session at 1.0859.
After a recent abysmal run of form, the pound has been supported this morning by a better than expected Inflation report. While this data has been unable to lift sterling, it has helped cap any further depreciation for the time being. Forecasted at 0.6%, Core Inflation YoY came out at 0.9%; while August’s MoM Inflation Rate came in at -0.4%, forecasted at -0.6%.
After a difficult few days for the government and their ‘new’ approach to Brexit – Dominic Raab has travelled to Washington DC today to meet with Speaker of the House of Representatives, Nancy Pelosi, and Secretary of State, Mike Pompeo, to reassure them about the UK government’s plan to override elements of Brexit. Harsh critic of the UK government’s recent actions, Pelosi noted last week that if the UK broke international law and Brexit undermined the Good Friday Agreement, there would be “absolutely no chance of a US-UK trade agreement passing through Congress”.
It is also reported that four senior congressmen wrote a letter to No 10, urging the government to “abandon any and all legally questionable and unfair efforts to flout the Northern Ireland protocol of the withdrawal agreement and look to ensure that Brexit negotiations do not undermine the decades of progress to bring peace to Northern Ireland. No 10 responded by noting that they are “absolutely committed to a no hard border and no boarder infrastructure between the Republic of Ireland and Northern Ireland” and “we will continue to engage with our US partners on a bipartisan basis to ensure that positions are understood and to ensure we agree a trade deal with widespread support in the US.
As for EURUSD, the pair has been stuck in the 1.18 range the last few days after its volatile week last week. The pair opened at 1.1890, before losing a bit ground, closing off at 1.1846.
On the data front, we have Balance of Trade from the Eurozone at 10:00, before a plethora of US releases in the afternoon. Kicking off we have Inflation, followed by Retail Sales, then the all-important fed Interest Rate Decision. Rates are expected to stay on hold, but markets will be keen to hear any comments from Powell regarding policy, given that this will be the last fed Press Conference before the highly anticipated November election.