Service update:We’re operating normally, without disruption to service, security or normal transfer times. Need help? Get in touch here

If you are having difficulty locating the information you require, we're here to help. Just get in touch and we will do our best to assist you.

Sterling skyrockets, Merkel suggests backstop solution can be found by Halloween

currency-newsSterling skyrockets, Merkel suggests backstop solution can be found by Halloween
The pound tore higher yesterday, surging on the back of hopes the UK could still reach a Brexit deal with the EU.

Sterling has slipped back a bit this morning however, with GBP/EUR dipping to €1.1032, GBP/USD sliding to $1.2214 and GBP/CAD subdued at C$1.6258. GBP/AUD and GBP/NZD have retreated to AU$1.8070 and NZ$1.9117 respectively.

The main market mover today will be Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, with USD investors eager for more insight into the bank’s outlook on monetary policy.

What’s been happening?

A sudden bout of Brexit optimism propelled the pound to a three-week high yesterday.

GBP exchange rates began to strengthen in the early afternoon after talks between Boris Johnson and French President Emmanuel Macron.

Macron echoed German Chancellor Angela Merkel in suggesting the UK had 30 days to find an alternative to the Irish backstop.

However, what really lit a fire under Sterling were subsequent comments from Merkel clarifying her ‘30 days’ comment. She suggested she did not see it as a firm deadline and that a deal could be achieved by 31st October.

The US dollar also accelerated against its peers yesterday, buoyed by comments from Kansas City Federal Reserve President Esther George in which she suggested the Fed’s July rate cut was not needed.

Meanwhile, the euro was mostly static yesterday as a surprise uptick in Eurozone PMIs failed to dispel concerns that German could still fall into a recession this year.

What’s coming up?

Centre stage today will be Fed Chair Jerome Powell’s highly anticipated speech at Jackson Hole.

USD investors will be listening carefully for any signals that the bank will implement another cut in September.
However, a backdrop of robust US economic indicators makes this far from a done deal, and could result in the US dollar moving sharply higher this afternoon if Powell maintains a hawkish outlook.

For GBP investors the focus will remain on Brexit, and more positive headlines could send the pound even higher.

Finally, in the absence of any Eurozone data, Italy’s political crisis may return as the main catalyst of euro movement. The country faces the prospect of snap elections unless a new government can be formed in the coming days.
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)

Check our exchange rate

Thanks, we'll be in touch.

Check your inbox - one of our currency experts will be in touch to complete your quote.

If you want see our online exchange rates straight away, simply register online & log in.