Brexit. Not going well is it. GBP/EUR volatile as talks drag on.
Welcome to the start of another action-packed trading week. Today, we’re bringing you a quick Brexit update. Specifically, what’s been going on lately and what does it all mean for GBP. Following that, we’ll give you our usual rundown of all of the top trading events for your calendar this week. Ready? Let’s do this!
Another volatile week
The GBP to EUR exchange rate has taken a further tumble after last week proved to be (drumroll…) yet another volatile one. This, despite the pound experiencing its biggest one-day gain since June in the middle of the week. The pound closed on Friday at 1.0911 against the euro.
GBP/EUR price, 2020 YTD
Source: Tradingview
Brexit’s impact on the value of the pound and its relationship with other currencies, specifically the euro, has been pretty clear to date. It’s become quite obvious that this is the new normal for GBP and we can expect to see further impact on its values as talks between the UK and EU negotiators progress. Note: ‘progress’ may be too strong a word here — so far we’ve seen everything but progress!
And it’s not as if it’s only Brexit that the GBP is having to contend with right now.
What just happened?
There were a few notable events that turned GBP red. Here’s a smattering:
● UK PM Boris and fellow Conservatives agreed on a controversial bill that violates the Brexit accord with the EU.
● US Presidential hopeful, Joe Biden stepped into the fray when tweeting, “Any trade deal between the US and UK must be contingent upon respect for the Agreement and preventing the return of a hard border. Period.” Ooof!
● Health experts have suggested putting the UK back into a second national lockdown as Coronavirus cases are reportedly rising.
● The Bank of England said it had briefed policymakers on how a negative interest rate could be brought in. Just 10 minutes after that bombshell, GBP had dropped 0.7% against the USD.
● Money markets then appeared to be prepping for British interest rates entering negative territory by Q1 2021 if no deal is agreed with the EU.
A good lesson for traders
This should all be a pretty nice reminder that fundamental analysis is exactly that, fundamental to the valuation of an instrument or commodity. It’s important to check every possible angle and that’s what fundamental analysis is all about. It’s a way of looking at the forex or other markets by analysing economic, social, and political forces that may affect prices.
All of the above events are feeding into the negativity of GBP’s valuation. So, keep an eye on the news, the papers, what is Brussels saying, what’s Boris doing (you can’t miss it)… It’s all relevant.
Speaking of fundamentals…
The hottest trading events this week
Here are all of the super-important trading events coming up this week.
Monday 21st September
No major events scheduled. (Take the day off, you’ve earnt it!)
Tuesday 22nd September
● We’ll get an update on last month’s Existing Home Sales, a key indicator of the overall health of the US economy (USD).
Wednesday 23rd September
● The RBNZ press conference will update us on the latest Interest Rate Decision (NZD).
● We’ll also get a whole load of PMI info (Composite, Manufacturing, Services) from the UK (GBP).
● The US will follow suit with their own Markit Manufacturing PMI, as well as giving us an update on their Crude Oil Inventories (USD).
Thursday 24th September
● Stateside, we’ll find out about the latest Initial Jobless Claims and get a look at the New Home Sales figures (USD)
Friday 25th September
● To finish off, on Friday we’ll get an update on the US’ MoM Durable Goods Orders (USD)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
