Prospect Of Hard Brexit Leaves Pound Down
GBP/USD is trading with a negative sentiment falling to a five-month low over growing fear of the prospect of a hard Brexit. The UK waits for its new PM to lead them out of the EU which is looking likely to be Boris Johnson.
The market seems to be pricing in a scenario of no-deal exit on October 31st however, investors will keep an eye on the Bank of England (BoE), which is due to announce a no-change decision on interest rates tomorrow.
The greenback is trading broadly higher as the Federal Reserve (Fed) gets set to begin its two-day meeting. The Fed is widely expected to deliver another “patient hold”, however, the market will be closely watching for the updated economic projections and looking for signs of future rates heading lower by the end of this year.
FOMC members are hoping that the ongoing trade frictions between the US and several of its partners are contained, allowing for sustainable growth, without any prop from the central bank.
The economic calendar is relatively thin today, and we expect the currency market to trade within recent familiar ranges ahead of the Fed announcement.
Negative economic sentiment from the Eurozone hurt the shared currency yesterday. EUR/USD was down 0.25% on the day after the ZEW Indicator for Economic Sentiment for Germany declined to minus 21.1 points.
Global trade tensions, geopolitical risks and fear of a hard Brexit scenario are sharpening the appetite for Euro bears. European Central Bank (ECB) Chief Draghi issued fresh signals saying the central bank can turn to more stimulus tools to support the regional bloc.
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