GBP>EUR – 1.0996
GBP>USD – 1.2672
EUR>USD – 1.1524
GBP>CAD – 1.7069
GBP>AUD – 1.7781
GBP>SEK – 11.273
GBP>AED – 4.6534
GBP>HKD – 9.8220
GBP>ZAR – 20.900
· CAD BoC Consumer Price Index Core (YoY)(Jun)
- USD Rally may pause on US fiscal wrangling
- GBP Eases lower amid no-deal Brexit fears
- EUR Soars, how high can it go?
- GOLD Eases from multi-year tops
Cable has settled in the lower 1.2700s, below Tuesday’s six-week peak at 1.2768. The pound has so far been unaffected by news from the Brexit front. The UK’s Telegraph newspaper has today reported that the UK government is pessimistic about reaching a trade deal with the EU, just days before Prime Minister Johnston’s end-of-July deadline for reaching a deal in principle. The FT also reported, citing unnamed senior government officials, that the government has abandoned hopes for reaching a trade deal with the U.S. before the presidential election in November, which means that there will be zero hope for a deal by the time Britain leaves the EU’s single market at the end of the year. The pandemic gets the blame for the slow progress. If these reports are right (and it must be said that they do have a ring of truth about them), then the UK is looking likely to be heading for trade on WTO terms, which would render less favourable terms on much of the UK’s external business transactions. Economists are currently taking a bearish view of the pound.
The euro, along with the Aussie and Kiwi dollars, posted fresh highs against the dollar and yen, despite a backdrop of flagging stock markets. EUR-USD reached its highest level since January 2019, at 1.1547, the culmination of what has now been a five-week rally. EUR-JPY pegged a fresh six-week high at 123.34. Most other euro crosses are also firmer, though remain below recent highs. Cable settled in the lower 1.2700s, below Tuesday’s six-week peak at 1.2768. USD-JPY plied a narrow range just above the one-week low seen yesterday at 106.68, while EUR-JPY and the risk-sensitive AUD-JPY scaled to respective six-week highs. GBP-JPY and CAD-JPY, in contrast, remained below their respective six-week highs, which had been printed yesterday. AUD-USD reached a new 15-month peak at 0.7153, while NZD-USD ascended further into the 18-month high territory. USD-CAD settled around the 1.3450 mark, above the six-week low seen yesterday at 1.3422, concomitant with front-month WTI oil futures settling below the three-and-a-half-month peak that was left at $42.40 yesterday. Gold and silver prices have continued to surge, reflecting investors’ expectation for global monetary stimulus taps to remain open and the dollar to remain weak. The gains in the non-yielding assets also reflect concerns that inflation might spike as a consequence of the stimulus.
XE Market Analysis Europe – 22nd Jul 2020
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