The pound plummeted on Thursday as the UK government revealed some of the preparation that would be required to help mitigation the pressures caused by a no-deal Brexit.
Sterling is trading in a wide range again this morning, with GBP/EUR subdued at €1.1094 and GBP/CAD muted at C$1.6788 and GBP/USD climbing to $1.2835. Meanwhile GBP/AUD and GBP/NZD have dipped to AU$1.7622 and NZ$1.9296 respectively.
The US dollar is likely to be in the spotlight today, with markets focused on the Jackson Hole symposium and the latest US durable goods dataext
What’s been happening?
The pound tumbled against many of its peers on Thursday as the UK government shone another light on the implications of a ‘no-deal’ Brexit through the release of the first of its papers detailing how it was preparing for such an eventually.
The documents outline how trade with the EU is likely to be complicated by a no-deal Brexit, leading to delays with new customs checks – something analysts fears could greatly impact many smaller businesses in Britain.
While the government remained confident that a deal can be reached the EU, it appeared that markets did not share in this optimism, leading Sterling to be driven lower.
The GBP/EUR exchange rate witness a sharp sell-off on Thursday as these Brexit jitters more than offset some subdued PMI figures from the Eurozone.
Meanwhile, the GBP/USD exchange rate also faced pressure on Thursday due to a resurgent US dollar.
This rebound in USD came as safe-haven demand saw investors flock to the currency, following another escalation in trade tensions between the US and China as they exchanged new tit-for-tat tariffs.
What's coming up?
Looking ahead, the UK will publish its latest mortgage approval figures this morning, with economists forecasting that home loans will have continued to rise at a healthy pace in July.
However, the data may have a limited impact on the pound should markets remain preoccupied with Brexit, especially if the narrative continues to revolve around the chances of a no-deal Brexit.
Following the release of Germany’s latest GDP estimate (which printed in line with expectations) a lull in further data may hamper movement in the euro today, leaving it at the mercy of markets.
Meanwhile, the US dollar may see some downside risks this afternoon following the publication of the latest US durable goods orders reading, with economists forecasting that goods orders will have contracted last month.
However, these could be offset should the Federal Reserve’s Jackson Hole meetings this evening continue to simulate demand for USD.
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