GBP/EUR: Brexit & Eurozone CPI To Drive Trading Into The Weekend
  • Euro steady after the pullback from record highs.
  • Sterling weak as Brexit-deal tensions rise.

Investors were not expecting the European Central Bank meeting on Thursday to make any policy changes. Still, the recent comments from its members regarding the hardening exchange rates of the euro have put the market participants on alert.

The ECB officials’ comments also helped the dollar to pace its bounce from recent lows, and the US job reports on Friday also supported the greenback. The North American job numbers showed a declining pace of job growth in August, but still enough to bring down the jobless rate to 8.4 Percent from 10.2 Percent in July.

The US dollar has witnessed a sell-off at the start of September and had hit +2 years low on the back of increased worries over the US economic recovery and the chances of the Fed rates staying lower for much longer than earlier anticipated. The common currency’s strength against the dollar was also due to the recovery fund jointly instituted by the Eurozone nations.

The euro steadied in recent trading after falling from 1.20 dollars earlier and was at 1.1841 dollars on Monday while the dollar index also traded flat near 92.875. The US trading holiday on account of Labour Day means lesser than usual market volumes.

The fall in the stock market, especially in the US stocks, also attracted inflows to the haven-linked dollar. It is usually observed that the dollar and yen strengthen when sell-off happens in the equities. The dollar was trading at 106.19 against the yen.

Elsewhere, the sterling fell 0.5 Percent against the dollar as the UK threatened to override its EU exit deal. The currency was at 1.3218 against the dollar and 89.605 pence against the euro – a one week low.

The Chinese Yuan was trading at 6.8334 against the dollar in the offshore market, without much change, after customs data yesterday showed exports growth at the highest since March 2019; but imports declined.