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Weekly roundup: Hopes of UK-EU trade deal limit pound downside

currency-newsWeekly roundup: Hopes of UK-EU trade deal limit pound downside
With the possibility of a UK-EU trade agreement still on the table, the downside potential of the pound eased in spite of the two sides remaining at odds on key issues.
 
While Boris Johnson warned the UK to prepare for an Australia-style trade deal, he did leave the door open to continue talks, although comments from a government spokesperson suggesting negotiations were over applied pressure on Sterling sentiment.
 
The pound’s upside potential remained limited ahead of the weekend despite concerns of a no-deal scenario diminishing as the risk of talks collapsing remains.
 
Signs of dovishness from Bank of England (BoE) policymaker Gertjan Vlieghe also put pressure on the pound at the start of this week, with his comments raising the chances of fresh monetary loosening to come.
 
However, GBP exchange rates could find further support on the back of September’s UK consumer price index report.
 
As the monthly inflation rate is expected to pick up from -0.4% to 0.5%, this may reduce the case for greater BoE dovishness in the near term.
 
Another underwhelming performance from the CBI industrial trends orders index may put pressure on the pound, however, as worries over the performance of the wider UK economy mount.
 
In addition, UK manufacturing and services PMIs published at the end of the week are forecast to show expansion, but that private sector activity slowed in October, potentially driving some GBP movement.
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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