MPC member Saunders stated that prolonged high Brexit uncertainty could warrant looser monetary policy..

The dollar maintained a firm tone by default, although there was a retreat from 3-week highs amid concerns over restrictions on Chinese investment into the US.

EUR/USD recovered slightly from 28-month lows near 1.0900. Sterling was undermined by speculation over an interest rate cut after dovish comments from Bank of England member Saunders while political tensions remained intense.

The yen and Swiss franc maintained a firm tone while the Australian dollar was undermined by Reserve Bank rate-cut expectations.

There was further choppy trading in equities with domestic factors tending to dominate amid mixed sentiment. Oil prices were hampered by the recovery in Saudi Arabian output and underlying demand concerns.

Precious metals were undermined by a firm dollar and an unwinding of long positions with silver at 1-month lows. Cryptocurrencies remained under pressure with Bitcoin at 3-month lows.

Bank of England if global growth remains disappointing and adverse effects of high uncertainty are becoming clear in UK data. If a no-deal Brexit outcome was avoided, policy could go in either direction, although it was plausible that the next move in rates could be down rather than up. Relatively dovish rhetoric triggered Sterling selling with a GBP/USD slide to below 1.2300.

Irish Foreign Minister Coveney stated that the EU was ready to negotiate, but the UK hadn’t sent a serious proposal. Brexit Secretary Barclay stated that talks are coming to a moment of truth and there was still a long way to go, but a deal could be made with goodwill. GBP/USD remained on the defensive below 1.2300 while GBP/EUR retreated towards 1.1240.

CFTC data continued to indicate a large short Sterling position, maintaining the potential for substantial short covering if there are positive fundamental developments. The Lloyds business barometer improved only slightly for September and Sterling secured only marginal gains as tensions remained intense surrounding parliament and the Conservative Party conference.

Economic Calendar

07:00EUR German Retail Sales (Y/Y)(AUG)3.30%5.20%
07:00EUR German Retail Sales (M/M)(AUG)0.50%-0.80%
08:00CHF KOF Leading Indicator(SEP)94.597
08:55German Unemployment Change(M/M)(SEP)-4K
08:55German Unemployment Rate(M/M)(SEP)5.00%5.00%
09:30GBP Total Business Investment (Q/Q)--0.50%
09:30GBP Current Account-32.0B-30.0B
09:30United Kingdom GDP (Y/Y)-1.20%
09:30United Kingdom GDP (Q/Q)0.50%-0.20%
09:30GBP Mortgage Approvals(AUG)66.17K67.31K
09:30GBP Consumer Credit(AUG)0.900B0.897B
10:00CPI (EU Norm) Prelim MM(SEP)-0.40%
10:00CPI (EU Norm) Prelim YY(SEP)-0.40%
10:00CPI (EU Norm) Final YY*(SEP)0.50%0.50%
10:00CPI (EU Norm) Final MM*(SEP)--1.80%
10:00Euro-Zone Unemployment Rate(AUG)7.50%7.50%
13:00Germany CPI (M/M)(SEP)--0.20%
13:00Germany CPI (Y/Y)(SEP)1.50%1.40%
13:00Germany Harmonised CPI (M/M)(SEP)--0.10%
13:00Germany Harmonised CPI (Y/Y)(SEP)1.20%1.00%
13:30CAD RMPI (M/M)(AUG)-1.20%
14:45USD Chicago PMI(SEP)47.550.4
15:30USD Dallas Fed Manufacturing Business Index(SEP)-2.7
22:00NZIER Business Confidence (Q/Q)--34
23:30AUD AiG Performance of Manufacturing Index(SEP)-53.1

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.