Home > Resource Hub > Daily Market News > Johnson’s election call slumps Sterling

Johnson’s election call slumps Sterling

Johnson’s election call slumps Sterling

GBP

The path of least resistance for the Pound is to the downside, as the prospect of a UK election has added fresh uncertainty to the ongoing Brexit saga. UK PM Boris Johnson conceded yesterday, for the first time that he will not meet his pledge to take Britain out of the EU before the 31st October and called for a general election for the 12th December to break Britain’s Brexit deadlock. The opposition, however, has rejected the election offer with Labour leader Jeremy Corbyn stating he will wait to see what the EU decides on a Brexit delay before deciding which way to cast his vote.

All-in-all, Brexit is still in limbo and Boris Johnson seems stuck between a rock and a hard place. As of writing, the pound finds itself at 1.2820 against the Dollar and 1.1538 against the Euro.

 

 

USD

The Dollar was higher yesterday after better than expected manufacturing PMI data. The U.S. currency was boosted after the Markit purchasing managers’ index came in higher than expected, at 51.5 compared to 51.1 in the prior month. Still, weakness in the economy remained a concern as new orders for key capital goods fell more than expected in September. The sector has been hit by uncertainty over the year-long trade dispute between the U.S. and China.

Other data on Thursday showed that the jobs market remains healthy despite other signs of weakness in the economy. The number of Americans filing for unemployment benefits unexpectedly fell last week to a seasonally adjusted 212,000 the Labor Department stated.

Still, the data confirmed expectations that the Fed will cut borrowing costs for a third time this year when policymakers meet next week. President Donald Trump has pushed for even more rate cuts, pointing to falling interest rates at other central banks around the world.

 

 

EUR

The sentiment around the Euro has been deteriorating throughout this week, particularly after the currency hit 2-month peaks near 1.1180 on Monday against the Dollar. The pair is struggling for direction at the 1.1100 as we start the trading session on Friday.

The renewed selling bias in spot has been confirmed yesterday on the back of the dovish tone from the European Central Bank. In fact, as largely anticipated, the ECB left the monetary conditions unchanged on Thursday. In what was his last meeting as President, Mario Draghi reiterated the risks to the economic outlook and inflation remain tilted to the downside amid the prolonged slowdown in the region.

 

 

Data to watch

09.00 EUR – German IFO Business Climate

 

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.