The pounds slides

Sterling remains under considerable pressure this morning – all related to the new UK government’s hard-line stance on Brexit and the associated increasing fears of a no-deal departure from the EU on 31st October – and is fast approaching 92p against the euro and $1.21 against the dollar.  Key levels to watch for the pound now are 93p, which is its low in the period since the June 2016 referendum, reached in August 2017, and $1.20 against the dollar, also a post-referendum low reached in January 2017. It is sometimes in the nature of these things that it may have to revisit these levels first before some respite begins to set in for the currency.

The euro is not much changed against the dollar, managing to hang in there just above the $1.11 level and so still remaining within, albeit at the bottom of, the $1.11 to $1.14 range that has prevailed over the last few months

Bond yields in the US are holding steady ahead of the Fed meeting today and tomorrow, with 10-year yields trading at about 2.05%. The market fully expects the Fed to deliver a 25bps cut in interest rates, so it will be more interested in what the central bank might signal in terms of any further reduction beyond tomorrow. Meanwhile, German 10-year yields are trading close to their very recent all-time lows, hovering just below -0.40% this morning

Trade talks between the US and China re-open today in Shanghai – this follows the breakdown in talks that occurred in May and which saw the imposition of another round of tit-for-tat tariffs

Data due today includes the European Commission’s latest Economic Sentiment Indicator for the Euro Area,  and PCE inflation, consumer confidence and house prices in the US