Forex Today: Boris and sterling brace for more Brexit drama, some stability in trade, and Canada votes

Yohay Elam FXStreet

Here is what you need to know on Monday, October 21:

Brexit: GBP/USD kicked off the week with a drop toward 1.29 after an eventful weekend. Parliament forced the government to ask for an extension to Article 50. Prime Minister Boris Johnson still continues trying passing all the relevant legislation this week. It is unclear if House Speaker John Bercow will allow another "Meaningful Vote" which failed on Saturday, but the vote on the Withdrawal Bill is set to be debated on Tuesday. While Johnson may be nearing the votes to pass his Brexit agreement, the opposition may try to add amendments, for a customs union or for a second referendum. EU Leaders will be watching and are ready to approve an extension if lawmakers fail to approve Brexit. Sterling volatility is set to remain elevated.
The US Dollar kicked off the week little changed after falling on Friday. Richard Clarida, Vice-Chair of the Federal Reserve has not pushed back against market pricing of a rate cut later this month. Some speculated that he quietly endorsed a rate reduction. Moreover, weak Retail Sales weighed on the greenback last week.
Trade: Chinese Vice-Premier Liu He said the US and China made concrete progress. In the meantime, China left the Loan Prime Rate (LPR) unchanged. The world's second-largest economy thus postpones monetary stimulus to 18 of its banks.
Europe: Incoming European Central Bank President Christine Lagarde has put the blame for the global slowdown on US President Donald Trump's trade wars. Other reports suggest the ECB will leave refrain from introducing additional stimulus this year. Outgoing ECB President Mario Draghi presides over his last decision on Thursday.
Canada holds Federal Elections today with a tight race between incumbent Justin Trudeau and contender Andrew Scheer. battle for the top job. Markets will be content with both candidates if either gain an absolute majority.
Cryptocurrencies have recovered from the lows with Bitcoin trading above $8,000.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD looks well bid above 1.1600

EUR/USD extends its recovery and climbs back above the 1.1600 mark in quite an auspicious start to the week. Improved risk appetite following the US-Iran agreement to reopen the Strait of Hormuz continues to weigh on the US Dollar, lending support to the risk complex. Looking ahead, investors are likely to remain on the sidelines ahead of Wednesday's FOMC meeting.

GBP/USD climbs to multi-day highs around 1.3460

GBP/USD remains comfortably in positive territory north of 1.3400 the figure on Monday. Cable continues to draw support from an improvement in market sentiment after reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold extends the recovery, targets $4,400

Gold rallies on Monday and climbs well above the $4,300 mark per troy ounce. The precious metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.