Portfolio

FX round-up: Sterling jumps on continued optimism hard Brexit can be avoided

By Alexander Bueso

Date: Wednesday 16 Oct 2019

FX round-up: Sterling jumps on continued optimism hard Brexit can be avoided

(Sharecast News) - It was a volatile day for Sterling as a succession of contradictory headlines around whether the outlines of a Brexit deal had in fact been agreed or not cascaded across traders' screens throughout the day.
Nevertheless, as of 1659 BST, cable was climbing by 0.52% to 1.28505, on the back of a fresh report, citing EU sources, who said that issues around the so-called 'level playing field', trade customs and Northern Irish consent had all been resolved and agreed to by London and Brussels.

In parallel, the pound was edging 0.13% higher against the European single currency to 1.1603, having risen as high as 1.1631.

Nonetheless, an earlier similar report had been quickly shot down by DUP leader Arlene Foster herself.

Analysts were skeptical too, with those at Rabobank telling clients early on Wednesday that the most likely scenario continued to be one of early elections and, eventually, a deal.

Josh Mahony at IG held a similar view, telling clients: "despite apparent progress it seems that time has run out for a deal to be agreed and drawn up ahead of tomorrow's [EU council] summit.

"[...] despite the lack of clarity on exactly how Johnson plans to get a deal across the line, there is a growing confidence that Johnson wants a deal despite previous fears that a no-deal Brexit is his primary aim [...] it is evident that traders are more confident than ever that a no-deal Brexit is going to be avoided."

Mixed UK economic data also failed to hold Sterling back.

Data from the Office for National Statistics had revealed that year-on-year headline consumer price inflation in Britain was steady at 1.7% in September, falling short of forecasts for an acceleration to 1.8%.

But Samuel Tombs at Pantheon Macroeconomics said the soft CPI print did not foreshadow a rate cut by Bank, pointing out how recent weakness in the exchange rate and rising unit labour costs would serve to push inflation back to the Monetary Policy Committee's 2.0% target by early 2020.

In parallel, ONS reported that the year-on-year rate of increase in UK house prices had stopped falling at the end of the summer, picking up from a pace of 0.8% for July to 1.3% in August (consensus: 0.6%).

That was thanks to help from lower interest rates on mortgages, Tombs said.

Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange Market.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page