FX Update: Sterling has taken a turn lower
FX Update: Sterling has taken a turn lower in early week trading, with markets reacting to both dovish BoE-speak and to a report from the UK's Institute for Government finding that it will be impossible to deliver the computer systems for the special arrangements for Northern Ireland's border by the end of the year. Prime minister Johnson has pledged, and worked into the Withdrawal Agreement legislation, to leave the post-Brexit transition period by the end of the year, hence the negative reaction by markets. Ireland's deputy prime minister Coveney also said that forming a new trade deal between the EU and UK is "probably going to to take longer than a year." Member of the BoE's Monetary Policy Committee Vlieghe, meanwhile, said in the FT over the weakened that he is ready to cut rates if data doesn't improve, similar to the view expressed by governor Carney last week. Cable has dropped nearly 0.5% in printing a 17-day low at 1.2999, while EUR-GBP has risen by a similar magnitude in making a 17-day peak at 0.8560. Elsewhere, EUR-USD has lifted above its Friday high in making 1.1132 in a move driven by moderate euro outperformance. EUR-JPY has posted a two-week high at 122.05, while EUR-CHF and other euro crosses have also seen gains. The yen remained on a generally weak footing as Asia's MSCI Asia-Pacific index hit a new 19-month high with investors anticipating Wednesday's signing of the U.S.-China phase-1 trade deal. USD-JPY was buoyant, though remained below Friday's 18-day high at 109.68, while AUD-JPY posted a fresh 10-day peak. AUD-USD, posted a six-day peak. Liquidity was below par in Asia with Japanese markets closed for a public holiday. The U.S.-China trade deal will be a major focus this week as the details haven't been made public.