Pound Exchange Rates Plunge: GBP/USD Falls Below Key Resistance Levels on Rising No-Deal Brexit Risks

GBP/USD Hits Six-Week Low, Pound to Euro Dips below €1.10

The Brexit driven Pound sell-off continued yesterday as no-deal Brexit fears pummel Sterling sentiment sending GBP/USD and the Pound to Euro exchange rate lower.

The Pound to US Dollar exchange rate fell below the psychological $1.30 barrier, with GBP/USD losing nearly five cents since the start of September. Meanwhile, the Pound Euro exchange rate shed almost a cent.

At the same time, US Dollar exchange rates rallied in risk-off trade on Brexit and US-China tensions, while the EUR found support from revised GDP figures. This left the EUR/USD exchange rate flat yesterday, although the US Dollar is making some gains against the Euro this morning.

Also in focus today is CAD exchange rates and the Bank of Canada rate decision, will a neutral outlook from the bank help to prop up Canadian Dollar exchange rates?


Pound (GBP) Sell-Off Gathers Pace on Brexit Fears

The Pound (GBP) selling bias remained firmly in place through yesterday’s trading session as concerns that the UK is heading towards a no-deal Brexit continued to mount.

GBP investors were spooked further by the resignation of the head of the UK government’s legal department, reportedly in response to Boris Johnson’s plans to override part of the EU withdrawal agreement.

In the absence of any GBP data releases, this downtrend in the Pound is likely to persist through today’s session as the focus remains firmly on Brexit.

So far this morning, the GBP/USD exchange rate is continuing to fall while the Pound dips below €1.10 against the Euro.


Euro (EUR) Buoyed by Revision to Eurozone GDP

The Euro (EUR) ticked higher on Tuesday, bolstered by a revision to the Eurozone’s second quarter GDP figures. However, the Euro slipped against the US Dollar as USD/EUR strengthened on a growing risk-off mood.

The latest GDP estimate reported that the Eurozone economy contracted 11.8% between April and June, up from the previous estimate of a 12.1% decline in growth.

Meanwhile, the Euro may struggle to find direction through today’s session as EUR investors brace for the European Central Bank’s (ECB) policy decision on Thursday.


US Dollar (USD) Bolstered by Risk-Off Trade

The US Dollar (USD) struck higher against the majority of its peers yesterday, with demand for the safe-haven ‘Greenback’ boosted amidst renewed risk aversion in markets.

This souring of risk appetite came in response to renewed US-China tensions after President Donald Trump spoke of the possibility of the US economy decoupling from China.

Coming up, the US Dollar may look to extend its rally through today’s session if the latest JOLTs figures report a rise in US job openings in July.


Canadian Dollar (CAD) Undermined by Oil Slump

The Canadian Dollar (CAD) was on the defensive on Tuesday as a sharp decline in WTI oil prices put some significant pressure on the commodity-linked ‘Loonie’.

However, these is scope for CAD exchange rates to recover ground today if the Bank of Canada (BoC) remains broadly neutral in its forward guidance as it delivers its latest rate decision later this afternoon.


Australian Dollar (AUD) Dented by Halt to Vaccine Trials

The Australian Dollar (AUD) ticked lower overnight on Tuesday, with the appeal of the risk-sensitive ‘Aussie’ undermined by news that trials for a promising coronavirus vaccine have been paused after a participant had an adverse reaction.


New Zealand Dollar (NZD) Slips as PM Ardern Plans Tax Hike

The New Zealand Dollar (NZD) also fell back in overnight trade, with NZD investors unsettled by New Zealand Prime Minister Jacinda Ardern’s promise to raise taxes on the top 39% of earners if reelected later this year.

Matthew Andrews

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