ForexLive European FX news wrap: Pound whippy as Johnson calls to prepare for no-deal Brexit

Author: Justin Low | Category: News

Forex news from the European trading session - 16 October 2020

Headlines:

Markets:

  • EUR leads, AUD lags on the day
  • European equities higher; E-minis up 0.3%
  • US 10-year yields down 0.8 bps to 0.724%
  • Gold up 0.1% to $1,909.95
  • WTI down 0.8% to $40.62
  • Bitcoin down 1.4% to $11,379

EOD 16-10
It was a quiet session for the most part but things really picked up in the final hour after UK prime minister, Boris Johnson, responded to the EU by calling to prepare a no-deal Brexit outcome by January next year.

That said, he was careful with his choice of words and trade talks in the meantime look set to continue so hopes for a Brexit deal are still very much alive.

At the end of it all, this week appears to have culminated in more Brexit posturing by both sides as negotiations are set to continue over the coming weeks still.

The pound was trading higher in hopes that Johnson will explicitly state that talks will be extended, with cable rising to 1.2960 before suffering a quick drop to 1.2865 after Johnson said that the UK will aim for an Australia-style deal i.e. no-deal outcome.

Thereafter, the barrage of headlines saw the pound rather whippy around 1.2880 to 1.2920 and is settling a little on the higher side currently as Brexit talks should continue.

Elsewhere, the risk mood was mostly tepid but improved slightly after Pfizer announced that they could apply for emergency use of their vaccine in late November.

The dollar is mildly weaker as such with EUR/USD rising from 1.1710 to 1.1740 while AUD/USD pared some of its early losses from 0.7075 to 0.7090.

Looking ahead, the pound will remain a key focus for now but expect stocks and risk to take cues from any more US stimulus headlines ahead of the weekend.

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