Yesterday was another bad day for the pound, as markets digested the previous week's poor economic data and news from the Conservative party conference over the weekend. Specifically, Boris Johnson's interview in The Sun, in which he revealed four 'red lines' regarding Brexit, suggests that a transition deal may be more distant than expected. The pound sold off sharply after the start of the day yesterday, and has continued to sell off today.
GBP/USD has now fallen below 1.33, with the current exchange rate trading just below 1.3270. This morning, we lowered our medium-term outlook on the pound to neutral after the exchange rate weakened since its peak earlier in September. Over at EUR/GBP, after strengthening for the past two days, today the exchange rate is trading sideways. The pair is currently trading just above 0.8830. Finally, the pound has made some progress against both the Australian dollar and the Canadian dollar. GBP/AUD is currently below 1.6990, while GBP/CAD is just above 1.66.
This week's economic releases includes a range of survey data. Yesterday, Markit manufacturing PMIs were lower than expectations (55.9 vs. 56.4 expected). Today we'll get Markit/CIPS construction PMI data while on Wednesday we'll get Markit/CIPS services PMI data.