Sterling is down to six-week lows against the USD and taken below the key 1.18 level on the EUR. Headlines yesterday were reporting on Europe planning to tighten up the MIFID regulations, a foundation of the FX forward contract world. With Europe looking to toughen regulations on the City of London while Britain does not have a seat at the table in Brussels, we could be in for some wild price swings off the back of similar headlines moving forward. As mentioned in our update yesterday, the financial services industry makes up 80.2% of the UK economy. The industry will, therefore, be a huge sticking point during the negotiation period.
Elsewhere today, we have the all-important Non-Farm Payrolls numbers due from the US at 13:30 GMT, one of the highlights of the economic calendar. The market looks to this figure as a sign of the health of the US economy, as it indicates how many jobs have been added over the previous month. January was expected to be a strong month, with a market consensus of 160k jobs added. Coupled with USD being considered as a safe haven amidst Coronavirus headlines, this could continue USD’s bullish run and drag the cable rate lower.
Have a good weekend.
Author: Jack Nicholls, Relationship Manager
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