The pound has gradually declined over the past couple of days as Brexit negotiations between the Conservative and Labour Parties looked prone to collapse. There has been a lot of speculation that talks between the government and the opposition had hit a dead end and the pound weakened off the back of this. Pressure on the pound has however eased this morning after it was confirmed that the two parties will actually be continuing negotiations to agree a cross party Brexit deal. Sterling will remain sensitive to any political news as the seemingly never-ending Brexit drama continues to rage on, until we finally have some concrete evidence that the end is in sight.
Two days of trade talks between the U.S. and China begin today, which have already started to influence the currency markets. The Japanese Yen, which tends to benefit in times of global uncertainty, has strengthened in the build up to the talks. There has however been a decline in the price of the U.S. dollar, Chinese yuan and Australian dollar as they could all be directly affected if, as expected, Donald Trump imposes new tariffs on Chinese goods.
Today’s Key Data Releases
There are no data releases out of the UK today but as mentioned the home currency will continue to be dictated by political events so could remain volatile.
Jerome Powell, Federal Reserve Chair, will be making a speech later in Washington. This will be closely scrutinised for any hints towards the Feds stance on future monetary policy. Producer Price Index (PPI) figures out of the U.S. later today also have the potential to move the Greenback.
Trade Balance figures out of Canada this afternoon could affect the Loonie, should they deviate from the expected outcome.