Pound soars as Brexit deal shimmers on the horizon

The pound shot higher yesterday after some comments from chief EU negotiator Michel Barnier, who said that the EU was ‘prepared to offer Britain a partnership such as there never has been with any other third country.’

Immediately after this, Sterling surged by around 1% against the euro and the US dollar, 1.6% against the Australian dollar, 1.1% against the New Zealand dollar and a full 2.4% against the South African rand.

This morning, GBP/EUR is trading at €1.1128, GBP/CAD is still up at C$1.6838 and GBP/USD has advanced to $1.3040. GBP/AUD and GBP/NZD have both held their ground this morning and are trading at AU$1.7878 and NZ$1.9580 respectively.

What’s been happening?                          
                            
At the same time as yesterday’s pound boost following Michel Barnier’s comments, the US dollar got a lift by way of some impressive GDP figures. Second quarter annualised growth figures beat forecasts of a 4% uptick, instead coming in at 4.2%.

Heading further north, the Canadian dollar remained under pressure yesterday as fears remained that Canada would be ‘frozen out’ of any new North American trade treaty.

What’s coming up?

The euro could receive a leg-up later today when Germany’s latest inflation and unemployment figures will be published. Currently economists are forecasting August’s harmonised inflation rate will show no change at 2.0%.

Aside from this, a raft of Eurozone data will also be forthcoming, including business and consumer confidence prints, as well as Spanish inflation figures.

Finally the pound could struggle to hold onto its gains today as the latest batch of consumer credit figures are released. Forecasts point to a dip in the level of borrowing, which could mean that faith in the UK economy is taking a hit.