News & Analysis
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Sterling starts the week marginally lower after Johnson’s deal suffers another blow. On Saturday, MPs sat in parliament on a weekend for the first time since the Falklands war, and voted for the Letwin amendment.
White smoke rose from Brussels and Monday yesterday as Boris Johnson and Michel Barnier announced that a deal for an orderly withdrawal from the EU had been reached.
At 13:30 BST yesterday the US dollar weakened broadly against its G10 counterparts after retail sales data for September surprised to the downside.
Sterling took another leg higher yesterday as more positive headlines regarding a last-minute deal hit traders’ news feeds. Sterling rallied 1.5% against the US dollar which was notably the largest positive move in currency markets globally yesterday.
US-China trade sentiment turned negative, allowing the dollar to make some progress against the G10, especially against risk-sensitive currencies such as NZD, GBP, NOK and AUD.
The euro had a strong finish to last week, with two of its main rivals the dollar and sterling fell due to idiosyncratic factors. Sterling has largely held on to last week’s rally this morning, despite Brexit noise in the headlines turning mildly unfavourable over the weekend.
The APAC summit in mid-November is where a breakthrough, or even a narrow preliminary trade deal, may occur. Until then, we expect CNY to act as a buffer against tariffs, trading in the mid-point of the 7-7.20 range.
Stability has been the common feature of the Turkish lira in H2 2019 as the economy shows signs of rebounding and the deflationary trend continues under the watchful eye of Governor Uysal and his cautious cutting cycle.
The dollar is generally lower this morning, amid broad optimism about two key global risk stories, US-China Trade and Brexit.
The Mexican peso faces considerable downside pressures from both domestic and external risks. The BCB have joined the heard of EM central banks cutting rates to spur on growth and inflationary pressures.