Pound Sterling plunges on Brexit uncertainty 

• “The pound has fallen below $1.24 on Brexit uncertainties, more than offsetting initial gains following the Supreme Court ruling.” Lloyds
• The Pound to Euro exchange rate is +0.04% higher @ €1.12899 on 26.09.2019
• The Pound to US Dollar exchange rate is +0.07% higher @ $1.23671 on 26.09.2019

The US dollar was slightly weaker overnight as the Euro and Pound Sterling eked out slight gains.

There was a cautious tone amid impeachment chaos in the US, but the Nikkei 225 was 0.4% higher, though US stock market futures were down 0.2% on the session.

Oil prices also slid in the risk-off tone.

Bitcoin dropped 3%, still languishing at the bottom of the $8000 handle.

The Day Ahead 

Thursday 26th September promises to be one of the busiest days of the week with an extremely full day of central bank speakers.

Despite a very full, North American session, things in Europe will be relatively quiet with just German Consumer Climate data and the ECB’s economic bulletin.

In Japan, BoJ’s Governor Kuroda will take to the stand, probably to try and convince a skeptical marketplace that the Japanese central bank has plenty of dovish ammo left to keep the Yen in check.

The North American session, promises to be much more dramatic, headlined by US GDP data.

Alongside this, Initial Jobless Claims and the Goods Trade Balance is also important data for the USD outlook.

An avalanche of central bankers is up next, with the FOMC’s Kaplan and President Draghi on at the same time.

The BoE’s Governor Carney speaks later in the afternoon, alongside another slew of Fed speakers.

Foreign Exchange Markets

It was a torrid day for the British Pound to Dollar exchange rate as GBP/USD exchange rates plummeted over 1% to rest in the middle of the 1.23 handle.

Analyst Kathy Lien at BK Asset Management provided a summary of yesterday’s price action, noting that Brexit uncertainty remains a sizeable obstacle for Cable, and a weigh on EUR/USD as Dollar appetite remains high, “At the start of the week, we said EUR/USD was headed for 1.09. It took some time for momentum to swing that way but the pair seems on course for that target now. Sterling also tumbled more than 1% versus the dollar. Aside from demand for the greenback, GBP/USD suffers from Brexit uncertainty. While Prime Minister Boris Johnson says he is “cautiously optimistic,” the Irish Prime Minister said the gap between the UK and EC remained “very wide,” a sign that there has been no major progress in Brexit negotiations.”

While Boris Johnson attempts to goad Labour into a general election, it seems that the Pound will continue to entertain the prospect of a Conservative win and a no-deal still being on the table.

Parliament will need to act quickly to secure an extension to send Cable rising back towards 1.30.

Source: ExchangeRates

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