Sterling sinks to one-month lows as investors become increasingly nervous about Britain crashing out of the European Union at the end of the month. With Boris Johnson expected to present his proposal for an amended Brexit agreement, investors questioned the likelihood of Brussels finally signing the divorce deal with the U.K.
Boris Johnson says the ‘reality’ of Brexit means that there will need to be customs checks on the island of Ireland after the U.K. leaves the EU. Johnson rejected claims that these custom checks will mean a harder border and refused to give details, but he said that formal proposals will be made soon. Furthermore, Brexit Minster, James Duddridge, spoke in the Commons and said the government would ‘set out more detail on an alternative to the backstop in coming days.’ He also reassured the House that there will be no infrastructure checks or controls at the border. The government proposals are expected to include new ideas to overcome the Irish Boarder issue, but EU officials are sceptical about the chances of a breakthrough.
The Dollar fell against major currencies on Tuesday after data showed weakness in the U.S. manufacturing sector and a lower-than-expected rise in construction spending. Data showed the U.S. manufacturing sector contracted in September to its weakest level in more than a decade as business conditions worsened amid trade tensions between China and the United States. The Institute for Supply Management (ISM) said its index of national factory activity fell to 47.8, the lowest reading since June 2009. A reading below 50 signals the domestic factory sector is contracting.
13:15 – USD: ADP Non-Farm Employment Change – Forecast at 140K from previous 195K.