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Pound Slumps (GBP/USD, GBP/EUR) as No-Deal Brexit Fears Continue

July 30, 2019 8:59 am | Modified July 30, 2019 1:40 pm
Brexit, EUR, GBP, TRY, USD | BY Charlie Murray

The British Pound to US Dollar exchange rate (GBP/USD) slumped to a fresh 28-month low this morning amid no-deal Brexit fears. Against the Euro, Sterling (GBP/EUR) followed a similar fate, although Eurozone economic data may be sufficient to initiate a rebound if that disappoints later in the session. Elsewhere, the impact of the UK’s political woes combined with the current popularity of the Turkish Lira has sent the GBP/TRY exchange rate down to five-month lows overnight, too.

Update: 12:35pm

The Pound has been moderating some of its losses, trading at levels of 1.2163 against the US Dollar (GBP/USD has hit lows today of 1.2118), and 1.0910 versus the Euro (GBP/EUR has hit lows of 1.0880).

Cable (GBP/USD) Exchange Rate Nosedives as No-Deal Brexit Risk Mounts

The British Pound to US Dollar exchange rate (GBP/USD) plummeted yesterday as markets factored in the increased likelihood of a no-deal Brexit. The pair hit levels not seen since March 2017, and although the start of Tuesday’s trade has offered a little respite, there’s nothing to suggest the downtrend will be reversed. Those promises from the US of a ‘great’ trade deal have delivered no support, and Boris Johnson received a cool reception yesterday as he headed to Edinburgh in a bid to keep the country united. Some indication of concessions from European leaders may be sufficient to provide at least a modicum of support for Sterling, but with EU politicians in the midst of their summer recess, and the tumbling fortunes of the Pound likely to shock many a British holidaymaker in the weeks ahead, they have little incentive to intervene early.

Can German Inflation Data Cut British Pound Sterling Some Slack?

Selling pressure against Sterling has been broad-based, with the Pound to Euro exchange rate (GBP/EUR) also seeing significant losses since the start of the week. Again there has been a modest bounce this morning, but key economic releases from the Eurozone later today could provide more sustained support for Sterling here. German Consumer Price Index (CPI) inflation data for July is set for publication and weakness here could point to criticism of the European Central Bank (ECB) for not acting in a bold enough manner at last week’s policy meeting. Given the scale of the Pound’s losses against the Euro (GBP/EUR) over the last 36 hours, there’s certainly scope for a rebound to be seen. Anything that highlights the fact that the Euro Area economy isn’t improving could well provide the impetus here.

Why Did it Move? Pound to Turkish Lira (GBP/TRY) Exchange Rate

The Turkish Lira remains in demand globally as, despite last week’s decision to cut interest rates, the yield on government debt remains attractive even once adjusted for inflation. This is driving the Turkish Lira higher across the board, while mounting political uncertainty in the UK is dragging on the British Pound’s fortunes, too. This divergent outlook has knocked the Pound to Lira (GBP/TRY) exchange rate down to five-month lows. From highs of 7.22 late last week, the cross now trades at 6.80, or almost 6% lower.

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