GBP/EUR: Pound Steady vs Euro Despite Stark IMF Brexit Warning

After closing lower versus the US dollar on Monday, the pound was attempting to recoup some of those losses in early trade on Tuesday.

The pound to US dollar closed the previous session 0.25% lower at US$1.2924. This was its lowest close in 5 days as no deal Brexit fears dragged on the pound and rate cut concerns hit the dollar.

Trade Deal or No Trade Deal?

With UK – EU trade deal talks due to start next week; pound investors are focused on Brexit. No trade deal Brexit fears are hanging over the pound are expected to keep a cap on any upside.

With talks due to start in less than a week, the two sides are toughening their stance. Comments from France that they will not be blackmailed into a bad trade deal because of a short British time frame didn’t help the mood towards the pound on Monday.

Prime Minister Boris Johnson is insisting that the transition period must end on 31st December, whether there is a trade deal in place or not.

Today the UK economic calendar is quiet. There is a mid-tier retail sales release from the Confederation of British Industry, which could shine some light onto the state of the UK economy. However, this is unlikely to distract much from Brexit headlines.

GBP/USD: US Dollar Weighed By Rate Cut Fears

The US dollar gave up early gains in the previous session, weighed down by growing expectations that the Federal Reserve will be forced to cut interest rates sooner rather than later, in an attempt cushion the US economy from the negative impact of coronavirus.

The number of coronavirus cases now tops 80,000, with the number of cases in South Korea jumping sharply. The number of cases in Italy also continued to grow sharply. This has made the market realise that coronavirus in not solely an Asia issue. The odd of a US rate cut in March now stand at 23%.

The US dollar could find some support later in the session with the release of consumer confidence data. Analysts are expecting household morale to tick slightly higher in February to 132, up from 131.6 in January.


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