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Sun 9 May 2021 21:36GMT

British Pound Plummets Versus Majors as UK-EU Brexit Talks May Collapse

Published: 8 Oct at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling (GBP)
The Pound plummeted across the board today, as the latest Brexit developments worsened concerns that a Brexit deal was seen as increasingly unlikely.

UK-EU Brexit negotiations appeared close to breaking down following a talk between UK Prime Minister Boris Johnson and German Chancellor Angela Merkel. UK officials indicated that they may give up on negotiations and push ahead with no-deal Brexit planning.

No notable UK data will be published tomorrow, leaving Pound investors to react to developments in Brexit and domestic politics. Sterling may be in for further losses in a week that has already seen deepened political uncertainty.

Euro (EUR)
The Pound to Euro exchange rate slumped to its worst levels in a month today. While the Euro’s appeal is limited by concerns that Germany may have fallen into recession in Q3, the shared currency did find a little relief from this morning’s better than expected German industrial production report.

Euro investors are likely to react to the strength of the Euro’s rival, the US Dollar, tomorrow. This is due to a lack of Eurozone data expected to be published, as well as anticipation for the Federal Reserve’s latest meeting minutes report.

US Dollar (USD)
The US Dollar was one of today’s weaker major currencies due to rising Federal Reserve interest rate cut bets and US recession speculation. However, GBP/USD still fell due to the Pound’s broad weakness.

With US Dollar investors awaiting key US wholesale inventories and especially the Federal Reserve’s latest meeting minutes, tomorrow could be a highly influential session for US Dollar movement.

Australian Dollar (AUD)
Despite concerns that US-China trade tensions were worsening again, the Australian Dollar was still one of today’s more appealing major currencies. This was due to rising Federal Reserve interest rate cut bets softening the perceived dovish outlook of the Reserve Bank of Australia (RBA).

With no Australian data of note due tomorrow, Australian Dollar investors will be paying close attention to US data and Federal Reserve speculation until Australian consumer confidence is published on Thursday.

New Zealand Dollar (NZD)
A surprisingly strong set of New Zealand government surplus figures left the New Zealand Dollar as today’s strongest major currency, causing significant losses in GBP/NZD. The New Zealand Dollar has also been benefitting from Fed bets like the Australian Dollar.

New Zealand’s economic calendar will be quiet tomorrow as well, so the trade-correlated New Zealand Dollar will be driven by global central bank and trade developments.

Canadian Dollar (CAD)
Despite some stronger than expected Canadian housing data, the Canadian Dollar was one of today’s weaker-performing major currencies. The trade-correlated Canadian Dollar was held back by US and Canada recession speculation, as well as falling commodity prices.

Similarly to other trade-correlated currencies, the Canadian Dollar will be driven by Federal Reserve news today amid a lack of notable Canadian data due for publication.

As of Tuesday, 8th October 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1156, GBP USD exchange rate was 1.2225, GBP AUD exchange rate was 1.8164, GBP NZD exchange rate was 1.9411, GBP CAD exchange rate was 1.6285, and GBP CNY exchange rate was 8.7339.
Dominic Lee About Author: (469 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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