Daily Brief

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A week of two halves

GBP strong, but not for long?

The pound held onto its gains from Monday’s positive GDP data going into the second day of the Parliamentary shutdown. Growth of 0.3% for July’s economy helped to dampen fears over a possible recession, while investors have also priced out a ‘no deal’ Brexit in October following the passing of the bill requiring Prime Minister Boris Johnson to request a delay to Brexit, provided he cannot strike an alternative agreement.

All of this worked out well for the pound, particularly against the euro and US dollar, however questions are being asked of the longevity of this success. The news of 3.9% growth, and an 11-year high, for UK wages was expected by some to have injected a further boost to the currency, however its failure to do so was seen as a sign of the pound’s dependency on a positive Brexit resolution.   

Investors pile in on EUR

As the clock ticks down to the European Central Bank (ECB) policy decision this Thursday, European stocks opened higher this morning with most sectors trading positively. Hopes are there for a fresh stimulus package to wake the euro out of its recent slumber, which helped the currency to make gains on the USD yesterday. 

Holding onto its gains this morning, EUR is proving more popular with investors than the USD amidst the ongoing US-China trade war, despite the ECB meeting tomorrow having the potential to throw an obstacle in the way.

Pressure builds on the US dollar

A disappointing week has seen USD lose out to the pound and the euro as positive news and optimism has been delivered elsewhere. 

Economic data is expected in the form of tomorrow’s inflation data and Friday’s retail sales figures, both of which are the subject of high hopes from investors. Positive figures could allow the US to join in with the good news, however the ongoing trade war with China is doing the USD few favours. 

Following months of turmoil in US-Chinese trade negotiations, a fresh set of de-escalation talks are planned for October. This development is more than enough to get investors’ hearts racing for a possible resolution and end to the US tariffs on Chinese goods that have severely impacted the world’s second largest economy.

Not all good news for the Aussie

While the Australian dollar had enjoyed a good start to the week, with the talks planned between the US and China fuelling hopes of a trade war resolution, negative Westpac Consumer Sentiment figures spelled trouble again for the Aussie.  

Today’s figures showed a 1.7% drop to 98.2 in September. This was a loss on August’s 3.6% jump to 100 from 96.5. These figures were released a day after the National Bank of Australia reported a negative impact on the AUD from a deteriorating business conditions index and damaged business confidence. All of this saw the Aussie lose ground to the USD, while until an end to the trade war is in sight, the currency may remain under pressure. 

GBP: Positive growth, but questions over longevity

GBP: Positive growth, but questions over longevity

EUR: All eyes on ECB stimulus package

EUR: All eyes on ECB stimulus package

USD: Hoping and waiting for positive news

USD: Hoping and waiting for positive news

AUD: Bad news for Consumer Sentiment

AUD: Bad news for Consumer Sentiment

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