UK Exchange Rates Today 17.10.2019: Pound Rally Fades As DUP Rejects Brexit Deal, Euro-Dollar Tests One-Month Best Rate


- "The [US Dollar] USD is trading lower against most of its G-10 peers amid a surge in Brexit optimism following news that the UK and EU have agreed on a Brexit deal." Scotiabank FX

- "Hurdles remain - the [Pound Sterling] GBP surged on confirmation of a deal being struck but fell back as NI’s DUP said they were not in agreement with the government - but progress has lifted risk appetite general."

- The inter-bank Pound to Euro exchange rate was valued €1.15237 on 17.10.2019

- The inter-bank Pound to US Dollar exchange rate was worth $1.27582 on 17.10.2019

Pound Sterling (GBP) Exchange Rates

British Pound bulls continued to drive upwards on Wednesday, clearing the 1.28 handle. The Pound to Dollar exchange rate (GBP/USD) appears to be racing higher on hopes that the EU and UK are coming closer to finding a compromise and agreeing to a Brexit deal. While it is apparent there is no deal imminent, someone forgot to tell Sterling which looks extremely optimistic that the risks of a no-deal Brexit may be soon taken off the table. British inflation data missed expectations data but this was as disregarded probably as any high tier inflation data in the history of the release.

Lloyds report on the weaker than anticipated inflation reading indicates that there is unlikely to be much pressure on the BoE to tighten rates anytime soon, though they believe the CPI will eventually return above the 2.0% target,

“The weaker-than-expected outturn for September UK CPI continues to support our view that the headline rate of inflation will remain below 2% through to the end of this year and well into 2020. Our refreshed forecasts see headline CPI averaging 1.6% (previously, 1.8%) in Q4, in part due to lower energy prices resulting from the next phase of OFGEM’s energy price cap but also the feed through from lower oil prices. On a slightly longer time scale, however, the outlook for domestically generated inflation is still consistent with CPI inflation moving back to, and most likely above, the Bank of England’s 2% target”

Euro (EUR) Exchange Rates

The Euro was enjoying the positive Brexit dialogue alongside the fact that the US Dollar was also softer on the day. Eurozone CPI data was a little soft in some metrics again, but with expectations back to essentially zero again it takes a lot to squash the EUR beneath the 1.10 level. Movements in the Euro continue to be dictated by the US Dollar, where the bulk of the volatility in FX markets is currently derived.

"Euro hit a 1-month high against the US dollar today on the back of stronger Eurozone data, weaker US data and Brexit optimism" says Kathy Lien, currency markets analyst at BK Asset Management. "The single currency had been trending higher for most of this week with a large part of its strength driven by the prospect of Brexit deal that would reduce uncertainty and remove a major risk for not only the UK but all members of the Eurozone. A deal is close with German Chancellor Merkel saying "we are in the last meters of the negotiation" and French President Macron adding that a "Brexit agreement is being finalized." An agreement should be announced in the next 24 to 48 hours and when that happens we expect all of the major currencies to rally including the euro. The September high of 1.1109 would be the target but the rally could extend as high as 1.1150 if the market finds the deal favorable. While Eurozone data is still expected to worsen, in the very near term Brexit optimism and the prospect of a Fed rate cut later this month will be main drivers of EUR/USD flows."

US Dollar (USD) Exchange Rates

The US Dollar sold off on Wednesday after retail sales disappointed and raised expectations that the Federal Reserve was going to be easing interest rates more aggressively. Equity markets have entered earnings season, and some glimpses of decent performances by US companies suggests that goldilocks market conditions are set to continue.


A tick down in Australian unemployment data helped send the AUD higher by 0.4% against the US Dollar. The Canadian Dollar continues to trade firmly against the US Dollar, still enjoying recent signs of economic vibrancy from its recent jobs report.


There is a mass of economic data releases for the UK, as retail sales are on tap but that isn’t important amid the Brexit endgame. US housing data is the most important data for the US Dollar, with Chinese GDP coming later in the evening an important indicator for how much harder Trump will try and squeeze the Chinese in the trade war.



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