GBP Exchange Rates Plunge on No-Deal Brexit Fears, Pound to Euro Falls to €1.10
The Pound (GBP) dived at the start of this week’s session, with fears that the UK is hurtling towards a no-deal Brexit weighing heavily on Sterling sentiment.
Reports that the UK is seeking to override parts of the EU withdrawal agreement, as well as setting an apparent deadline of 15 October to reach a deal, placed substantial pressure on GBP exchange rates.
This sent the Pound to Euro exchange rate tumbling, as well as GBP/USD despite thin trade in the US Dollar due to US Labour Day.
Looking ahead, Brexit will remain in focus today with the start of the latest round of UK-EU Brexit trade talks.
Optimism going into this week’s negotiations is decidedly low, with the UK government’s recent combative comments likely to cast a long shadow over talks.
Euro (EUR) Muted as German Industry Recovery Slows
The Euro (EUR) traded in a narrow range on Monday as EUR investors responded to weaker-than-expected German industrial production figures.
With factory output growth slowing significantly in July, EUR exchange rates were again buffeted by concerns that the Eurozone’s economic recovery may not be as robust as first thought.
Coming up today, we could see the Euro struggle to find support through today’s session. This morning’s GDP figures confirmed the Eurozone suffered a record contraction of growth in the second quarter, although the revision came in slightly better than forecast.
However, EUR is continuing to make gains against GBP today as the Pound to Euro exchange rate keeps sliding on pessimism surrounding this week’s UK-EU Brexit trade talks. However, EUR may experience greater volatility later in the week ahead of the European Central Bank’s policy meeting.
US Dollar (USD) Flat Ahead of Return of Congress
The US Dollar (USD) struggled for direction yesterday as the closure of US markets for Labour Day created some thin trading conditions in the ‘Greenback’.
The next round of US coronavirus relief remains in limbo and the US Dollar could face some headwinds if tensions between Republicans and Democrats show little sign of having cooled during the break.
USD/GBP is still trending higher this morning ahead of the US session, while Brexit worries weigh on the Pound to US Dollar exchange rate as UK-EU talks begin today.
Canadian Dollar (CAD) Slips as US Oil Prices Slide Back Below $40
The Canadian Dollar (CAD) was on the defensive through Monday’s trading session, with the appeal of the commodity-linked ‘Loonie’ undermined as WTI crude prices retreated below $40 a barrel for the first time in four weeks.
Australian Dollar (AUD) Strengthens on Improving Business Confidence
The Australian Dollar (AUD) struck higher overnight on Monday, with investors bullish on the ‘Aussie’ as Australia’s business confidence index printed higher than expected in August.
New Zealand Dollar (NZD) Muted on US-China Tensions
The New Zealand Dollar (NZD) held in a narrow range overnight, while investors shunned the risk-sensitive ‘Kiwi’ as US-China tensions rose after reports the US is planning to ban products made with cotton from China’s Xinjiang province.