FX Brief: Battered Pound Off Lows

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  • As European investors prepared to leave their desks for the day, the Swiss franc was showing relative strength, while the Canadian dollar was among the weakest. The pound bounced off its worst levels, while the euro was still clinging onto the key $1.1200 support.
  • The damage to the pound has been fairly marginal after a battering last week.  The Parliament has already voted to make it harder to push through a no-deal Brexit, whoever takes over Theresa May’s job this week. We will find out on Tuesday once all the votes have been tallied whether it is the favourite and hard-line Brexiteer Boris Johnson or Jeremy Hunt. But the legal framework is already in place to prevent a hard Brexit, so the pound may even end up pushing higher in the early days of Johnson’s leadership. Meanwhile Chancellor Phillip Hammond has declared he will resign if Boris wins, while Sir Alan Duncan has already quit as a Foreign Office minister.
  • Wall Street traded mixed after a firmer open as oil prices, which had boosted energy stocks, came off their highs. Iran announced it had captured 17 spies working for the CIA and sentenced some of them to death. This comes on the back of Iran’s seizure of a British tanker last week. Some oil inventors are concerned that Iran’s deteriorating relationship with the West may lead to supply disruptions in the region.
  • No economic reports are on today’s calendar, but volatility should pick up later in the week.
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