Weekend Events to Shape Next FX move

Friday is here after a tumultuous week on the currency exchanges. Volatility has been King, and its Queen has been the Great British Pound. Even after a small and inevitable wobble, thus far the gains have been sustained. Potentially great news for the import community, and as a net importing nation, it’s great news for the British economy.

Over at the Old Lady in Threadneedle Street, Bank of England commentators seem to have done an about turn. Ramsden; heard at the weekend to be talking up the possibility of interest rate cuts in a no deal Brexit scenario, has changed tack. Now talk of higher rates as the spectre of a deal comes into full sight has FX markets on red alert.

It would seem that time waits for no woman or man, as the weeks travails carry into an historic Saturday at Westminster. Will it or won’t the deal get approval? Boris Johnson for one seems confident. And really this parliamentary vote is what keeps us between the devil and the deep blue sea. GBPUSD recent pivotal support has been 1.2100: the initial Brexit target is 1.3500. We currently reside around 1.2850 (08:00 BST 18/10/2019).

And so today’s closing levels for the Pound are absolutely key. Will we see new highs as the rhetoric ramps up at the House of Commons, the whispers in the Chambers and the chatter in the press?

It could be safe to assume that it’s not going to be quiet and relaxing day in the currency markets.  The reason being is that a huge market moving event, a binary event of massive magnitude is happening when the markets are closed! On a Saturday. We could expect pre-positioning to take on extra importance. The currency markets and how they slew themselves could be the bellwether for probability of full Brexit approval.

Whilst all that’s going on let’s cast our focus to the wider Global economy and its machinations. It’s fair to say risk sentiment has got increasingly better, Brexit withstanding and even more significantly China’s confirmation on a tentative trade truce has markets moving out of safe havens. Overnight an OCBC Treasury Research reported confirmed as such. Earning season in the US is in full flow now and more companies posting strains numbers have bolstered market sentiment.

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