Pound Plunges on Fresh Brexit Uncertainty

GBP

The British pound surrendered post-election gains on new Brexit deadline prospects. As known, the United Kingdom is due to leave the European Union by January 31st, 2020. However, the transition period deadline is in December 2020. Media reports showed earlier that Boris Johnson is planning to revise the Withdrawal Agreement Bill to include a blockage for any extension to the transition period deadline. Therefore, this could lift the chances of the United Kingdom, leaving the European Union without a trade deal, which would increase risks and uncertainty. The GBPUSD tumbled to 1.3160, the GBPJPY dropped to 144.20, and the EURGBP inched higher to 0.8459.

AUD

The Australian dollar weakened against rivals post the Reserve Bank of Australia meeting minutes. The board believes that the current wage growth is not fast enough to support inflation and consumption goals. Moreover, the board agreed to reassess the economic outlook at the February meeting, raising the chances of an interest rate cut. The AUDUSD dropped to a one-week low of $0.6843, and the EURAUD edged higher to 1.6270.

USD

The dollar index, which measures the greenback against a basket of major currencies rallied to 97.30 as European currencies faltered. The media reported that Boris Johnson would be adding a revision to the WAB to avoid any extension to the transition period, which allows the UK to leave without reaching a trade deal with the EU. As a result, market participants favored dollar safety. On the data front, investors await a series of economic indicators among them housing starts, building permits, industrial production, and JOLTs job openings.

Metals

Gold prices traded near an upside resistance near $1480 lifted by the lack of clarity over the phase 1 trade deal, and fresh Brexit woes. The price of a silver ounce held steady above $17, while palladium logged a fresh record high of $2002.

Oil

Oil prices finished slightly higher on hopes of higher demand led by the recent trade developments between the world's largest economies. Market participants are looking forward to the US oil inventory data by the American Petroleum Institute and the US Energy Information Administration, today and tomorrow, respectively. The West Texas Intermediate crude futures rose to $60.32, and Brent futures ticked higher to $65.64.

Major Economic Events

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