Good morning,
Pound feels the pressure
The pound took another steep fall yesterday, continuing its trend by beating yearly lows against the euro over the last six years. The reason for the more aggressive fall from the 1.1154 down to 1.1047 yesterday can be put squarely at the doors of Boris Johnson and Jeremy Hunt – with both claiming that the Irish Backstop was “dead”.
With both Johnson and Hunt pushing for the more staunchly Eurosceptic Conservative membership votes, expect the rhetoric to be ramped up as we approach the closing stages of the leadership competition.
At 09.30GMT, retail sales figures will be published for the UK. Any potential upside will be muted by the overwhelming political focus and a fall could likely add more pressure on the Sterling in the short run – not exactly a good omen when considering the health of the high street.
There’s a new EU Commissioner in town
Across the Channel, the election of Ursula von der Leye, the new EU Commissioner, was confirmed by a slim majority vote. The new leader has already seemingly softened Europe’s approach to further Brexit extensions by announcing that further time could be afforded to the UK “should more time be required for a good reason”. However, Michel Barnier reiterated yesterday, perhaps for the thousandth time, that the negotiated deal will not be altered regardless of who is the next Prime Minister of the UK.
There are no Eurozone data releases today. With all eyes focusing on German production figures due to be released tomorrow, a negative release could further highlight Europe’s exposed economic position between the US and China’s global trade war.
More comments from Trump
In the USA, the dollar reacted again to President Trump’s comments regarding additional tariffs on Chinese goods before the end of the year. Whilst comments like this aren’t exactly surprising when considering that the US has already placed tariffs on $250bn worth of Chinese products, Trump now has to step up the rhetoric to fire up his base for his 2020 Presidential bid.
GBP drops
With the GBP crashing towards key lower support levels of 1.0988 on GBP/EUR and 1.2372 on GBPUSD, it’s advisable to get in touch with your account manager if you are a sterling holder looking to make an international transfer in the short term or if you are holding onto hopes for a rebound.
Feel free to contact us on 0808 274 6668 if you are UK-based, or 0203 918 2907 internationally if you haven’t been introduced to your account manager yet.
Have a great day.