Corpay^

Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team or visit corpay.com to find out more.

Pound reaches 1.25 as no-deal Brexit fears fade

GBP – Sterling climbs as Brexit developments continue

Last week, the Pound experienced something of a rebound, climbing above the 1.25 interbank level against the US Dollar as the chance of a no-deal Brexit faded, a significant movement—a 4.0% upswing in 10 days—considering at the start of September the GBP/USD exchange rate fell below the 1.20 barrier. UK inflation readings will be out on Wednesday, followed by the Bank of England’s September interest rate decision on Thursday, but rates are unlikely to change while politics are still the main focus. Meanwhile, Boris Johnson is in talks with the EU this week, and the Liberal Democrats positioned themselves firmly against Brexit at the weekend after they voted on a policy to stop an EU exit by revoking Article 50.

EUR – More stimulus  

Last week, the Euro took a tumble when the European Central Bank announced it was introducing more monetary stimulus—cutting interest rates further into the negative and re-starting its quantitative easing programme. The most influential pieces of economic data will be out on Tuesday in the form of ZEW Surveys to assess economic sentiment. A few European Central Bank policymakers are also scheduled to comment throughout the week, which may be of interest following the bank’s recent policy decisions.

USD – Waiting for the Federal Reserve 

One of the most interesting events for the US Dollar this week will likely be Wednesday’s Federal Reserve interest rate decision. The central bank is expected to make another rate cut after comments from Fed Chair Jerome Powell over economic headwinds. Powell said earlier this month: ‘There are all these risks and we’re monitoring them very carefully and we’re conducting policy in a way that will address them.’ As a result of the US-China trade war, the central bank made the decision to cut interest rates for the first time in a decade in July. All the while, US President Donald Trump is keeping the pressure on the central bank to keep cutting.

AUD and NZD – Global risk appetite in focus

Last week, concessions made by the US and China in the ongoing trade war and tit for tat tariffs allowed the Oceanic currencies some chance to rise. However, attacks on Saudi oil plants at the weekend which have disrupted more than 5% of global supply, caused a decline in global risk appetite, which weighed on the Trans-Tasman currencies.
 
This week, minutes from the Reserve Bank of Australia’s policy meeting will be released, which could give some indication as to what the central bank may look to do with monetary policy next. Additionally, in Thursday’s Oceanic session, the second quarter New Zealand growth figures will be out with forecasts for a fall. Influential Australian labour market data will be out on Thursday.

CAD – Under pressure 

Last week, the Canadian Dollar struck a nine-day low against the US Dollar as the Buck strengthened. The Canadian Dollar slid as markets expect the Federal Reserve won’t cut interest rates as much as previous forecasts and may take a less dovish stance. Additionally, the Canadian Dollar came under pressure when stats showed a widening in the ratio of debt to income for Canadian citizens—the Bank of Canada has previously suggested lower mortgage rates could pile further debt on Canadians. The Canadian August inflation reading will be out on Wednesday, followed by Retail Sales on Friday.