Good morning,

A Brexit deal was not reached yesterday. With the DUP remaining resilient to support, we now head into today’s EU Summit with a substantial gap to bridge still. 13:30 CEST today is the extent of time that remains for Johnson to pull together a deal to present with odds quite heavily against it happening.

The reality check will likely disperse through the early trading hours this morning, with pricing in of an extension and no-deal outcomes ramping up. Historically, these have been negative for the pound, however, the currency’s temperament at the moment cannot be predicted, and so all that can be confidently assumed are big swings.

This morning’s UK retail sales printed at 09:30 will likely be heavily shadowed by Brexit headlines.

The US Employment and Housing Starts figures however will be of more significance this afternoon.
Following yesterday’s unexpected weak retail sales data, a reading supporting this economic struggle will likely prompt markets to reheat the discussions on the Federal Reserve rate and monetary policy outlook.

Key Swedish unemployment data came in larger than expected, with the SEK losing further ground, as implications for the central bank policy meeting on October the 24th get further priced in. The SEK has been on a slippery slope this year, depreciating close to 10% against the Dollar, and approaching a 10 year low on the Euro.

There are worrying forecasts of a Brexit no-deal instigated currency sell-off in the Scandi markets emerging, as key Brexit developments struggle to clear key hurdles.

Have a great day ahead.

Author: Ross Hammond, Senior Corporate Account Manager