Foreign Exchange Daily Market Update 09/10/18

Tue, October 09, 2018

Sterling falls ahead the October EU summit.

Sterling started the week on the back foot as progress on Brexit could still turn out to be elusive.

Sterling lost almost all last week’s gains against the dollar on yesterday as a spokesman for the Prime Minister said to be cautious ahead of crucial talks. Britain will have to submit a proposal on the contentious Irish border issue by Wednesday to allow EU delegates to begin preparations ahead of a summit later this month, analysis is warning that the markets may be disappointed on the progress made.

A spokesman for the PM yesterday said the EU needed to move on the issue of the post-Brexit Irish border, the main issue keeping talks stalled. Even if a solution with Europe is agreed, the prime minister’s collation with the Northern Ireland’s Democratic Unionist Party could still put a spanner in the works.

The potential recovery of the pound will remain limited until we clearly get one of the parties to back down on its red lines. Therefore, the uptrend in sterling – euro, will be driven further by euro weakness, not by pound strength

The pound fell 0.6% against the dollar to $1.3036 yesterday afternoon, after earlier touching $1.3028. The move cancelled out most of its gains seen last week after the PM successfully handled her Conservative Party’s annual conference, boosting optimism in her ability to clinch a deal. Sterling slipped slightly to 1.1375 against the euro after 1.4% advanced last week.

Data to look out today.   

Not much data due today.  

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