Currency Market Analysis

Sep 08, 2020 | Currency Market Analysis

Global Themes

British pound falls as Brexit tensions flare

The British pound was in focus overnight as tension grew between the UK and European Union ahead of a looming deadline on trade talks.

The UK has imposed a 15 October deadline for the two parties to agree on their post Brexit relationship. While the UK’s Brexit deal concluded on 31 January this year, trade has continued under previous rules.

The GBP tumbled overnight on growing antagonism between the two parties with media reporting suggesting talks have broken down.

UK betting markets put the chance of a deal at 45%, according to Reuters.

Quieter session

Other than the GBP, FX markets were mostly quieter with the US closed for their Labor Day national holiday.

The USDSGD gained 0.1% with a weaker result in Chinese imports yesterday weighing.

A slowdown in Chinese imports might suggest a slowdown in manufacturing demand.

The euro remained pressured near two-month lows while the Japanese yen also remained near recent lows.

EU data due

The focus shifts to Australian data this morning with business confidence figures due at 9.30am.

Markets will be looking for signs of “lockdown fatigue” in Victoria and its impact on other states.

Later, final figures from European employment and GDP are due, while US confidence figures will be released overnight.

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