Good morning,
Following the roller coaster of volatility the pound saw yesterday, we open this morning supported above the key levels of 1.21 on the dollar and 1.10 against the euro. After last night’s vote came in at 328 to 301 in favour of blocking a no-deal, we head into the day with politics taking a full grasp on the currency movement.
Ignoring all the noise and drama around the events, our focus today is now on the House of Commons and the result that will surface today. The motion to delay Brexit by three months in the face of a no-deal split will be voted on, whilst Boris Johnson will attempt to trigger a general election. He will need support from the opposing Labour party to do this, so whether this is passed today or not is up in the air, however, the odds for a general election are high and very likely to come to a head in the following week.
As usual, the pound will be at the mercy of any announcements and what we have seen so far is that whichever way markets decide to go, it will do so in a big way – the range is huge right now. Yesterday saw GBPUSD trade in a range of 1.8%, with GBPEUR around 1.35%. This makes timing on your transfers more important than ever.
Less in the spotlight, but still impactful, the euro will be scrutinising European Central Bank President, Christine Lagarde, who will speak this morning. Any comments or signalling on the monetary policy stance will likely be priced into the euro. With EURUSD fighting to stay above the water of 1.10, this will be a pair to watch off the back of this.
The USD has dealt with problems of its own, with a key data reading surprising markets with a contraction – the first since 2016. The sentiment around growth following the initial Federal Reserve rate cut will remain a concern. New York Fed President, Williams, speaks today, and his stance on the health of the US economy and monetary policy will be important as a precursor to Jerome Powell speaking this Friday.
It is critical if you are deliberating over your currency requirements, particularly pound involved, to speak with our Account Management team to discuss best practice in volatile times. We have extended coverage until 20:00 during this period to provide support for clients.
Have a great day ahead.