Pound Struggles on Brexit Concerns

Pound Struggles on Brexit Concerns


The British pound extended losses against other counterparts following the latest Brexit concerns. The final round of negotiations between the UK and the EU will start today. Telegraph reported that Boris Johnson would tell the EU leaders that the deal never made sense and would leave Northern Ireland isolated from the rest of the United Kingdom. Johnson's latest comments raised the prospects of a hard Brexit, which could weigh on the UK economy. The GBPUSD fell to a ten-day low of $1.3127, the GBPJPY declined to 139.47, and the EURGBP edged higher to 0.8996.


The dollar index, which measures the greenback against a basket of major currencies, added to its prior gains rising to 93.20, supported by solid recovery prospects and the weakness of European currencies. The recently released economic indicators revealed that the US economy is on track for proper recovery. Meanwhile, the British pound took a hit from the revived Brexit woes ahead of anticipated EU-UK negotiations. On the other hand, investors are looking forward to the European Central Bank monetary policy meeting later this week to check how the board will deal with the latest surge in Euro and drop in inflation, especially after the comments of the ECB Chief Economist Lane about the EURUSD.


Major US stock-index futures rebounded following a sharp sell-off late last week. The recent sharp upside rally in tech stock triggered investors' concerns about unsustainable levels of valuation, which could be after the profit-taking and the massive sell-off. On the other hand, President Donald Trump reiterated the idea of decoupling from China, stating that the US would not lose money if no longer did business with China. The Dow Jones Industrial Average futures hovered around 28300, the S&P500 futures held steady near 3435, and Nasdaq futures eased to 11469.


Gold prices continued to trade in a tight range between 1915 and 1950, awaiting fresh fundamental drivers. Meanwhile, the price of a silver ounce held steady slightly below $27, and palladium futures were flat near $2330.


Oil prices resumed decline amid woes of a significant drop in demand. Russia's Novak stated last week that he expected demand to fall by 9-10 million barrels per day in 2020. Meanwhile, Saudi Arabia promoted discounts on crude prices for the first time since June. The West Texas Intermediate crude October delivery fell to $38.65, and Brent blend November delivery dropped to $41.61.

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