UK Unemployment rises but Brexit remains in focus

Daily Currency Update

GBP - British poundThe Great British Pound pushed beyond the 1.30 level through yesterday as a more targeted lockdown approach was adopted by the UK government. The move which many economists favoured over a full-scale national lockdown was taken positively by markets and helped sterling hit a high of 1.3080 throughout the day. As mentioned yesterday, COVID and Brexit are still the key factors affecting the UK and today sees attention shift back towards the latter. With UK Prime Minister, Boris Johnson, publicly stating that the time left to get a post Brexit trade deal in place is in “short supply” and he is ready to walk away if there is no agreement with the European Union by Thursday deadline. The main issues remaining are fishing rights and state aid, with the EU wanting the UK to follow its state aid rules and give their fishing fleets full access to UK waters.Downing Street has said that they are trying to “bridge” disagreement over these two areas, however, if both sides do not come to an agreement, they will either have to extend the 15th Oct deadline or settle for a “no deal” and do business under World Trade Organisation (WTO) rules. Both scenarios will lead to further uncertainty and could see both GBP and the Euro falling against their major counterparts. In terms of data releases affecting Sterling, this morning saw the news that UK unemployment rates grew to 4.5% in the three months to August, compared with 4.1% in the previous three months and redundancies rose to their highest level since 2009. As such GBP has fallen against most of its major counterparts. GBP/USD is down from 1.3060 to a low of 1.3020 while GBP/EUR dropped from 1.1070 to 1.1050.Brexit headlines will likely be the main driver through today's trading however, US Consumer price index numbers, due at 12.30, could impact markets.