The Brexit issue looks slightly more optimistic (Daily analysis 18.09.2020)

Following the ECB and the Federal Reserve events, the euro/dollar quotations remain unchanged compared to the end of the previous week. The pound is stabilizing after slightly more positive (than recently) reports on the negotiation of a trade agreement. The zloty records only limited changes.

Improvements in retail sales support the pound today

The pound's quotations calmed down somewhat on Friday morning after relatively positive reports from both sides, the UK and the EU, on the negotiations of a new trade agreement.

Yesterday evening, the British government admitted in a statement that a broad range of topics had been discussed and "some limited progress was made". The president of the European Commission, Ursula von der Leyen, in an interview with the Financial Times, said that "I am still convinced it can be done".

As a result, this morning's quotations of the pound remain practically unchanged from yesterday's closing. The price of the "cable", i.e. the GBP/USD pair, is slightly below 1.30 and the GBP/PLN was moving around 4.87-4.88. The stabilization could also be supported by retail sales data, which slightly exceeded market expectations.

Retail sales (excluding cars and fuels) increased by 4.3% year-on-year and 0.6% month-on-month, by 0.1 and 0.2 percentage points respectively above the economists' consensus. With Brexit in turmoil and yesterday's confirmation from the Bank of England that it is actively considering lowering interest rates below zero, macroeconomic data will now have a very limited impact on the pound.

The growth of activity in the Polish industry is fading in August

In the morning, the zloty's quotations against the main currencies are not marked by any major changes, although the Polish Central Statistical Office (GUS) published data on industrial production in Poland. In August, it fell by 5.8% on a monthly basis - and although the decline was expected, it was deeper than foreseen (-4.4%). This ended the three-month series of production increases month-on-month, after its April decline by 25.5%.

On an annual basis, industrial production continued to grow in August - by 1.5%, but it was also below expectations at 3.0%. Today's data from the Polish industry are not disastrous, but they show that after the first, "easy" months of restoring activity, subsequent rapid growths may be harder to achieve than previously expected.

The EUR/PLN quotations fluctuated around 4.45 before midday, the level known from previous days. In the case of the USD/PLN, there is also a stabilization and the exchange rate today moved in a limited fluctuation range of about 3.76. After the events related to the European Central Bank and the Federal Reserve, the situation in the case of the euro and the dollar on the global market has remained practically unchanged.

After yesterday's drop to around 1.1730, the lowest level in just over a month, the EUR/USD exchange rate rose to around 1.1870. If we look at the fluctuation range this week and the previous one, they converge, and the exchange rate of the main currency pair is right at the closing level of last Friday. Under such conditions, it is quite difficult to make more significant changes for the zloty, except for increased fluctuations for the pound. This afternoon (4:00 p.m.), the University of Michigan will publish the US Consumer Sentiment Index in September (minimal improvement is expected), which may increase the volatility of the dollar slightly, but without fundamental changes.