On the currency market, it is impossible not to notice the increased volatility of the British pound, which has recently recorded its greatest drop since the second half of September, exceeding 1.6 percent, but today, before noon, GBP started to make up for the losses.
At first, it was believed that there seemed to be growing concern among investors that progress in talks between the UK and the European Union was still insufficient to agree on an agreement on their future relationship before the 15 October deadline set by Boris Johnson. EU Commissioner Michel Barnier and David Frost warned that there are still significant gaps in fisheries, equal opportunities and governance issues.
Traders in the currency options market then raised their estimates for volatility, which could remain on the GBP/USD pair until tomorrow. In their opinion, the exchange rate could change in the range of less than 100 pips. If this assumption works, the GBP/USD exchange rate should still be widely consolidated.
However, today, the United Kingdom has signalled that it will not immediately break talks with the European Union about a trade agreement. "Britain will continue its efforts to reach an agreement with the European Union on their future relationship after the 15 October deadline set by Prime Minister Boris Johnson" Bloomberg said. This information seems to have caused the GBP/USD exchange rate to rise from 1.2900 to 1.2978, but this is just the light at the end of the tunnel and we are waiting for more details.
Yesterday, in addition to the worst labour market data in three years, there was also a political dispute in the UK about the possible introduction of a short-term but nationwide lockdown. The solution implemented this week by the Czechs would be introduced by the Labour Party. However, Boris Johnson makes it clear that he disagrees with the national lockdown.
So it seems that by the end of the weeks the excitement on the Forex market should not run out, and one of the most eye-catching currencies of the world may be the British pound.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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