The weekend saw tens of thousands of protestors descend upon the streets of London to demand Boris Johnson reverse his decision to prorogue parliament for up to 5 weeks in the run up to the 31st October, the Brexit deadline. 32 protests across different cities and sites were organised by anti-Brexit group Another Europe is Possible, with left-wing group Momentum rallying its supporters to block roads and occupy bridges.
Meanwhile, Michel Barnier reiterated that he will not scrap the contentious backstop, leaving Boris Johnson to mull over the possibility of ousting Tory MP rebels who continue to undermine his negotiating stance. Boris will today come face to face with former ministers, including Philip Hammond and David Gauke, who are leading a campaign to block no deal, and could warn them that they face deselection if they continue with their agenda against the government.
The decision to suspend the House of Commons for an extended period has caused outrage and a fall in the value of the pound. Remain MPs are desperately looking for ways to block no deal but after thwarting the process for more than 3 years, Dominic Cummings, the man many see as driving this campaign may just be one step ahead.
The euro lost value to the US dollar last week, making 5 consecutive losses, with the interbank market finishing the week just below 1.10, as markets fear the European Central Bank has not reacted quick enough to the economic downturn. Furthermore, comments from the ECB that expectations of a big stimulus package in September were overdone, didn’t help the struggling currency, and even the UK’s bruised currency was able to make gains against the euro on Friday afternoon. With Germany suffering a 0.1% contraction in Q2 and the Bundesbank expecting the German economy to contract again in Q3, the Eurozone’s powerhouse could soon find itself in recession.
The trade war between the US and China is showing no signs of coming to a close, with neither side willing to compromise on its current position, so this will continue to weigh on the global economic outlook as all feel the pinch. However, the US is expected to show robust PMI figures this week with an additional 155k new jobs created in the much-anticipated Nonfarm Payroll report released this Friday. Wages are anticipated to jump 0.3% month-on-month with the unemployment rate remaining steadily low at 3.7%.
The Aussie dollar has felt the effect of the US/China trade war more than most with economic data in freefall and no light at the end of the tunnel. The dollar was one of few currencies that lost value against the pound in August. This week, focus will be on the Reserve Bank of Australia’s monetary policy meeting tomorrow although the central bank is not expected to reduce its rate from the current level of 1%, following 25 basis point cuts in both June and July. Markets expect a monitored dovish tone though.
For more information on political and economic events that could affect your currency purchase, please contact your FCD account manager.
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