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Pound rallies amid Brexit optimism

currency-newsPound rallies amid Brexit optimism
The pound ticked higher on Friday, buoyed by hopes that Brexit tensions could ease and the UK will avoid a costly trade war with the EU.

Sterling is mostly muted at the start of this week, with GBP/EUR flat at €1.1724 and GBP/USD steady at $1.3426. GBP/CAD is rangebound at C$1.6817, while GBP/AUD and GBP/NZD dip to AU$1.8254 and NZ$1.9017 respectively.

Looking ahead, its set to be a busy week for GBP investors with a series of high-profile UK data releases set to potentially rock the pound.


What’s been happening?

The pound traded with some modest gains at the end of last week, amidst reports the UK government wishes to de-escalate tensions with the EU over the Northern Ireland protocol.

The Times reported that at a meeting in London on Friday, Brexit minister David Frost would signal to European Commission vice-president Maros Sefcovic that the UK is ready to renew efforts to reach an agreement.

GBP investors welcomed the news, amidst hopes it could avoid a damaging UK-EU trade dispute.

The euro, meanwhile, ticked lower on Friday following the publication of the Eurozone’s industrial production figures. September’s release confirmed factory output in the bloc contracted again, albeit at a slower pace than forecast.

Closing out the session was the publication of the latest US consumer sentiment index, with the US dollar weakening after the University of Michigan reported consumer morale fell to a 10-year low this month.


What’s coming up?

Turning to this week's session, some high impact UK data releases could result in some notable movement in pound.

The latest UK employment and inflation figures are both seen as influencing the Bank of England’s (BoE) next interest rate decision, with positive releases potentially raising the odds of a December rate hike and bolstering GBP exchange rates in the process.

For USD investors the focus in the first half of this week will be on the latest US retail sales figures. Will an acceleration of sales growth last month help to bolster the US dollar?

In the meantime, the publication of the Eurozone’s latest trade figures could provide some fresh impetus for the euro this morning, with another diminished trade surplus in September potentially weighing on EUR exchange rates.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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