After a much needed week off- I am now back on my desk feeling very refreshed and ready for what the market has in store for us for the rest of 2020. Looking at rates over the last week, it seems the Pound to Euro exchange rate came down a little on Friday bringing us below the 1.10 area again, but the Pound to Dollar rate managed to hang above the 1.30 area which is a positive sign.

Both the UK & The EU have acknowledged that they want a deal done by Mid November (We’ve heard this before), and so far the markets seem to like the positivity coming from both sides- as I have mentioned before in previous articles, I think a free trade deal is likely, but it will be pretty bare-bones and I am sure we will be looking at a long transition period with much more fun-filled years ahead of uncertainty, but as far as Boris Johnson’s promise of a Brexit deal being “Done” is concerned, I am pretty sure it will happen- if for nothing but political point-scoring.

Many banks are now lifting their expectations for Sterling, with 1.35 being a target over the next month for GBPUSD and 1.14 for GBPEUR. Both of which seem plausible if we begin to see more progress being made on the Brexit front- but always take these things with a pinch of salt, because as we keep seeing, we are always only one headline away from a big market drop.

The next thing to watch out for is the U.S Presidential Elections on Tuesday 3rd November; and so far, it looks like Joe Biden is leading the polls! Now what I will say is this; Clinton was also leading the polls in the last election, and we all know how that turned out… so I am cautious while watching these. In my mind, I do think that Trump will take this election, mainly because it is rare the incumbent loses, and Trump does benefit from the “Closet Vote” where his supporters are not usually the loudest- so though the market seems to be pricing in a Biden win, I do not see it unlikely that President Trump wins a second term this year.

We also have the ECB Rate Decision this Thursday which could be an eventful day for the Euro- we may see Lagarde talk down the Euro which could negatively impact the EURUSD exchange rate and benefit the GBPEUR rate- however, last time the prices were talked up so I would not take this as a certainty. With the Covid second wave in motion and further lockdowns being implemented around Europe by the day, I am expecting the Euro to be talked down in Thursday’s meeting.

Staying with Covid, cases in the UK are still on the rise, I have read some articles about the “R” rate dropping but talks of further lockdowns and counties being moved into Tier 3 seems likely, living in a Tier 2 area, I really cannot tell the difference from the previous tier, unless I’m doing something wrong? Kier Starmer is still calling for a Circuit Breaker lockdown but it seems Government support to businesses is just not enough at this point, with this being the last week of the furlough scheme, I expect the UK economy to become messier come November.

Not the most positive report from me, but we must always take an objective and realistic approach. Have a great week and as ever, if anything is needed please don’t hesitate to contact me.