Johnson’s Plans to Suspend Parliament Sink the Pound (GBP)
The Pound (GBP) fell sharply in trade on Wednesday, responding to reports Boris Johnson had asked the Queen to move her annual speech, effectively suspending Parliament until mid-October.
The move will leave a very small window for opposition parties to pass legislation aimed at blocking a no-deal Brexit, increasing the risks for a disorderly exit on October 31st.
This bearish trend should persist through the remainder of the week as a lull in economic data leaves the spotlight fixed on UK politics.
GBP/EUR Exchange Rate Slumps as Italy’s Political Crisis Resolved
The Pound Euro (GBP/EUR) exchange rate fell roughly half a cent yesterday, as markets welcomed the formation of a new coalition government between Italy’s centre-left Democratic Party (PD) and populist Five Star Movement.
The unlikely partnership will avert another general election, scuppering any opportunity for Matteo Salvini to capitalise on his nationalist League party’s recent surge in the polls and form a new right-wing government.
Today’s latest German CPI figures could put some pressure on the Euro if August inflation slowed as forecast.
US-China Trade Uncertainty Continues to Influence GBP/USD Exchange Rate
While Brexit served as the main catalyst for movement in the Pound US Dollar (GBP/USD) exchange rate on Wednesday, the pairing also saw uncertainty over escalating US-China trade tensions.
Speaking to reporters in the Ukraine, US National Security Advisor John Bolton suggested America and China still harbour disparate trade needs.
With no end in sight to the tensions, the appeal of USD is likely to remain limited.
Looking ahead, the latest US GDP reading could exert modest pressure on the US Dollar later this afternoon. Economists forecast growth may be revised to 2% in the second quarter, down from 2.1% in a preliminary reading.
BoC Rate Cut Speculation Limits GBP/CAD Exchange Rate Losses
The Pound to Canadian Dollar (GBP/CAD) exchange rate dipped by over half a cent yesterday, but speculation for potential near-term rate cuts from the Bank of Canada (BoC) prevented the currency from sliding any further.
In a note to clients, Goldman Sachs recommended shorting the ‘Loonie’ against the US Dollar and Japanese Yen (JPY) with expectations for across-the-board dovish monetary policies from BoC and other central banks.
GBP/AUD Exchange Rate Trims Losses amid Gloomy Australian Data
The Pound to Australian Dollar (GBP/AUD) exchange rate edged higher on Wednesday night, recouping losses from earlier in the day after an unexpected Q2 contraction in Australian private capital expenditure.
GBP/NZD Exchange Rate Rallies Following Disappointing NZ Data
After falling throughout the European session yesterday, the Pound to New Zealand Dollar (GBP/NZD) exchange rate bounced back overnight, with another drop in New Zealand business confidence weighing on the ‘Kiwi’.