Pound exchange rates slide as Brexit takes centre stage

The pound fell back on Friday, driven lower by ongoing no-deal Brexit worries and renewed demand for many of its peers.
At the start of this week’s session GBP/EUR is muted at €1.1153, GBP/USD is flat at $1.2740 and GBP/AUD and GBP/CAD are holding steady at AU$1.7438 and C$1.6645 respectively. Only GBP/NZD is showing any real movement so far as it climbs to NZ$1.9250.
Today will bring the release of the Eurozone’s latest construction output figures, with the euro likely to advance should output rise in line with forecasts…

What’s been happening?
The pound found itself on the defensive at the end of last week’s session, with a renewed focus on Brexit weighing on sentiment.
Concerns of a no-deal Brexit remerged on Friday as Foreign Secretary Jeremy Hunt told ITV News that crashing out of the EU ‘would be a mistake we would regret for generations’.
Adding to these concerns were remarks by Denmark’s Finance Minister Kristian Jensen, who warned that time is running out for the UK to strike a deal and that there is a 50-50 chance of a ‘no-deal’ Brexit.
The GBP/USD exchange rate was one of the only major Sterling pairings not to fall into negative territory on Friday as easing trade tensions saw markets cool on the US dollar.
With much of USD’s recent gains being derived from the escalation of trade tensions between the US and China, the news that a trade delegation from Beijing will travel to the US for low-level talks this week saw investors developing a bit more appetite for risk.
The GBP/EUR exchange rate did slide however, with the euro being buoyed by the fall in the US dollar.

What's coming up?
Looking ahead to this week, the absence of any major UK data is likely to see Brexit remain the main catalyst for pound movement.
This is likely to see Sterling continue to trend lower should Brexit related headlines remain mostly negative in tone.
The euro, meanwhile, could look to extend its gains at the start of the session, with today’s data expected to reveal a solid upswing in Eurozone construction output in June.
Finally, while cooling trade tensions may limit demand for the US dollar this week, the currency could still see some solid gains if the minutes from the Federal Reserve’s August policy meeting bolster confidence that the Fed will commit to two more rate hikes this year.

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