The nomination of Boris Johnson as UK Prime Minister has clearly not been beneficent for Sterling (GBP/USD -3% since nomination), which has been falling consequently to tumble at decades low against major currencies. Furthermore, the recent drop in key economic releases, including long-awaited GDP figures for the second quarter have not been of great help. The newly elected PM is expected to face a no-confidence vote in an attempt to safeguard the UK from a hard Brexit when UK MPs will return from summer vacations on 3 September 2019. Meanwhile Irish governing liberal-conservative party Fine Gael confirms it is willing to maintain current backstop deal unscathed with the EU so that negotiations can go smoothly. Investors will look closely at UK labor data due on Tuesday as well as inflation the day after.

 


 

Stay on top of the markets with Swissquote’s News & Analysis

 


 

As suggested by the Bank of England monetary policy meeting from 1 August 2019, which decided to maintain its Bank Rate on hold at 0.75%, the economy is expected to grow less strongly, despite the BoE assumption of no Brexit shock, at 1.30% in 2019/2020 from prior 1.50% and 1.60% respectively, a significant shrinkage. The publication of 2Q GDP figures point to similar ends, with the year-on-year gauge given at 1.20% (prior: 1.80%) and quarter-on-quarter in contraction territory, declining by -0.20% (prior: 0.50%). June's indicators are also not very encouraging, with industrial production at -0.60% (prior: 0.50%), manufacturing production in a slump of -1.40% (prior: -0.20%) while trade balance improved (GBP -7 billion; prior: GBP -10.7 billion). Overall, despite optimism related to the UK MPs willingness to break PM Boris Johnson “do or die” pledge by either evict him or force a Brexit extension, it seems that the situation remains far from rosy in the country.

The recent rebound in GBP/USD, currently trading at March 1985 low, is about to turn as upcoming June labor and July inflation data should stay dull while trade war headlines will continue to be at center-stage. The pair is maintained within 1.2080 and 1.20 range.

This report has been prepared by AC Markets and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by AC Markets personnel at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD retreating from the highs amid trade wars, weak German figures

EUR/USD is trading below 1.1150, retreating. The German IFO Business Climate dropped to 94.3 points, below expectations. Markets are concerned by the intensifying US-Sino trade wars.

EUR/USD News

GBP/USD consolidates amid Brexit uncertainty

GBP/USD is trading below 1.2300, consolidating its gains. The UK and the EU have been blaming each other for a potential no-deal Brexit. US-Sino tensions are in play as well.

GBP/USD News

USD/JPY recovers farther from multi-year lows on Trump’s positive trade-related comments

The incoming positive trade-related comments dented the JPY’s safe-haven demand. Improving global risk sentiment helped the pair to recover around 150-pips intraday. Investors now look forward to the US durable goods orders data for a fresh impetus.

USD/JPY News

Forex Today: Trade wars paint markets in red, Brexit looks worse, and central banks are limited

Here is what you need to know on Monday, August 26th: The US-Sino trade war is painting global markets in the red. The US dollar is losing some ground to major currencies as yields plunge, while it gains against commodity currencies. Gold is rising and oil is falling.

Read more

Gold retreats from multi-year tops, fills weekly bullish gap on positive trade headlines

Gold extended its intraday pullback from fresh multi-year tops and dropped to fresh session lows in the last hour, filling the weekly bullish gap. The US-China trade tensions escalated further.

Gold News

Majors

Cryptocurrencies

Signatures