News

Sterling Plunges on Brexit Concerns

GBP

The British pound plunged against other major currencies amid rising chances of a "no-deal" Brexit. The uncertainty on how the United Kingdom will leave the European Union has weighed heavily on the pound this year. The currency tumbled hardly yesterday as the new PM Boris Johnson announced that the withdrawal agreement is dead and the UK will be leaving the EU on October 31st without a deal unless the EU chose to renegotiate.  A "no-deal" Brexit is the hardest scenario to the British economy and would lead to a severe recession, forcing the Bank of England to ease monetary policy to support the economy. The GBPUSD tumbled to a twenty-eight-month low of $1.2118 during early trading today, the GBPJPY declined to 131.60, and the EURGBP edged higher to 0.9190, the highest since September 2017.

USD

The dollar index, which measures the greenback against a basket of major currencies extended gains rising to a two-month high of 98.21. The recent economic data showed the resilience of the US economy, allowing the Federal Reserve to asses before going aggressive on easing the monetary policy. The Fed kicks-off a two-day meeting today to decide on policy amid growing expectations of a 25 basis points rate cut. Market participants are looking forward to the PCE figures today. The Personal Consumption Expenditure is one of the Fed's favored inflation gauge, and any significant changes would weigh on the probability of rate cuts. On the other hand, the dollar index found support from the falling European currencies. The sterling fell sharply, weighed down by Brexit concerns where investors rushed to dollar safety.

Metals

Gold prices edged higher as US Treasury yields tumbled ahead of an anticipated interest rate cut by the Federal Reserve tomorrow. The price of a gold ounce rose to a high of $1428. Meanwhile, silver prices appreciated slightly to $16.43, and palladium rallied to $1560.

Oil

Oil prices inched higher supported by the expectations of an interest rate cut by the Federal Reserve, and the resumed trade talks between China and the United States. The West Texas Intermediate crude futures rose to $57.30, and Brent futures climbed to $64.21.

Major Economic Events

GMT Country Event Expectation Previous

12:00

EU

German CPI (MoM) (Jul) 

0.3%

0.3%

12:30

US

Core PCE Price Index (MoM) (Jun)

0.2%

0.2%

14:00

US

CB Consumer Confidence (Jul)

125.0

121.5

14:00

US

Pending Home Sales (MoM) (Jun)

0.5%

1.1%

20:30

US

API Weekly Crude Oil Stock

 

-10.961


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