The Pound remains in the spotlight, as investors brace for more political drama surrounding Brexit. Although UK Prime Minister Boris Johnson has formally requested for an extension to the Brexit deadline, it is still undetermined how long that extension should be, and whether or not an election would be called in the interim. The ball appears to be in the EU’s court in terms of deciding when the new Brexit deadline would be, with such a decision having to be unanimous.
After Monday’s breaching of the 1.30 mark for the first time since May, GBPUSD has shed about one percent, even as it now attempts to return to 1.29. The Pound is still some 3.5 percent higher against the US Dollar since October 10.
With a fair amount of optimism surrounding a Brexit deal already baked into Sterling, it is at risk of unwinding more of its recent gains if markets grow weary waiting for more Brexit certainty; more near-term gains for the Pound are not guaranteed. At least investors can take heart that the risks of a no-deal Brexit have now been severely diluted, which places a sturdier floor for the Pound.
PMI readings set to influence Euro’s next moves
The Euro is seeing contrasting fortunes against the US Dollar and the Pound. EURUSD appears to have peaked in its latest run-up at 1.117, with the currency pair paring recent gains, while EURGBP seems to have found an immediate floor at 0.86. Still, with PMI figures due out of key European economies tomorrow, worse-than-expected data would only add to the dismal sentiment surrounding the bloc’s currency.