Pound Plunges on Hard Brexit Prospects

GBP

The British pound plunged as the lingering political risk is raising the chances of a hard Brexit. UK policymakers are trying to force another extension for article 50, postponing the Brexit deadline to January 31st, 2020, from October 31st, 2019, currently, to avoid a no-deal Brexit which is considered as the worst scenario of the Brexit Saga. As a response, Boris Johnson declared that he would be calling for an early general election if the parliament controlled the Brexit process. The GBPUSD dropped to $1.1966, its lowest level since the flash crash witnessed in October 2016, and the GBPJPY tumbled to 127.04, slightly short from posting a three-year low.

EUR

The Euro drifted lower against the United States dollar following soft economic data. The manufacturing data showed that the sector contracted for the seventh straight month to confirm the weakness of the economic activity in the Euro region. Investors are looking forward to the European Central Bank monetary policy meeting that is taking place on the 12th of September. The soft economic data are lifting the chances of implementing monetary policy easing measures by the ECB. The EURUSD tumbled to $1.0930, its lowest level since May 2017, and EURJPY plunged to 116.06, the lowest since April 2017.

AUD

The Reserve Bank of Australia left monetary policy unchanged earlier today. The official cash rate remained at 1.00% as expected. The bank reiterated that interest rates would remain low for an extended period, and monetary policy would be eased further if needed to support sustainable growth. The AUDUSD bounced-off a four-week low of $0.6687, and edged higher to $0.6725 following the decision.

USD

The dollar index which measures the greenback against a basket of major currencies extended gains and rose to 99.35, its highest level in more than two years. The latest plunge in European currencies lifted DXY as the Euro and Pound account for almost 70% of its basket. Market participants are looking forward to the release of the ISM Manufacturing PMI for a further hint on the performance of the sector, which was weakening lately.

Metals

Gold prices continued to trade in a tight range awaiting fresh fundamental drivers. The price of a gold ounce found support near a low of $1517, and resistance near a top of $1534. On the other hand, the price of a silver ounce edged higher to $18.48, and palladium hovered at a five-week high of $1540.

Oil

Oil prices drifted lower amid growing investors woes over the global economic outlook. The world's largest economies began to impose tariffs on each other earlier today, although they are holding trade talks later. The trade disputes between China and the United States are weighing on investors' sentiment, and hinting for further deterioration in the global economic outlook. The West Texas Intermediate crude futures dropped to $54.32, and Brent futures declined to $58.08.

Major Economic Events

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