5th December 2017 - Sterling higher in European trading on increased optimism UK and EU would reach a Brexit deal

 

     

Sterling higher in European trading on increased optimism UK and EU would reach a Brexit deal

Sterling pushed higher in European trading on increased optimism that the UK and EU would reach a Brexit deal, but currency gains reversed sharply after a last-minute failure as a potential text deal surrounding the Irish border issue was blocked.

The dollar maintained a firm tone after Friday’s Senate deal on tax reform, although momentum stalled and US equities also lost support as the session progressed which dampened sentiment.

Although the Reserve Bank left interest rates on hold, commodity currencies gained ground on hopes for a firm tone in global growth with little change in defensive assets.

The UK PMI construction index strengthened to 53.1 for November from 50.8 the previous month. This was above consensus forecasts of 51.1 and the strongest reading for 5 months. The rebound was led by increased residential activity while there was further weakness in both commercial and civil engineering.

Ahead of a key meeting between UK Prime Minister May and EU Commission President Juncker, markets were increasingly confident that a deal would be secured later in the day. Sterling continued to gain ground, especially after reports that UK and EU negotiators had reached a deal on the Irish border issue with some form of special regulatory arrangement and GBP/EUR failed at around 1.1400.

Just ahead of the planned press conference between May and Juncker, there were reports of a last-minute setback and it was subsequently confirmed that agreement had effectively been blocked by the Northern Irish DUP Party. Both sides, however, were optimistic that substantial progress had been made and that it was still possible to reach agreement before the mid-December Summit.

Sterling declined sharply following reports of no deal and there was fresh selling interest on Tuesday. GBP/USD again dipped below 1.3450 from Monday’s highs above 1.3500 while EUR/GBP fell back to 1.1300.

     
 
       
 

GBP/EUR 

– 1.1309

 
 

GBP/USD

– 1.3410

 
 

GBP/CHF 

– 1.3225

 
 

GBP/JPY 

– 151.02

 
 

GBP/AUD 

– 1.7555

 
 

GBP/NZD 

– 1.9482

 
 

GBP/CAD

– 1.6984

 
 

GBP/ZAR 

– 18.1574

 
 

GBP/NOK 

– 11.1924

 
 

GBP/SEK 

– 11.3126

 
 

EUR/USD 

– 1.1857

 
       
  All rates are indicative of interbank rates*  
       
 
 

GBP/EUR

 
 

GBP/USD 

 
 

EUR/USD 

 
       
 
   

08:55 EUR

German PMI Composite

57.6

57.6

 
   

09:30 GBP

UK PMI Services

55

55.6

 
   

10:00 EUR

Zone Retail Sales (Y/Y)

2.70%

3.70%

 
   
 13:30 USD
US Trade Balance

-47.50B

-43.50B

 
 
   
 
 
*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time.  CentralFX are not responsible for the rates shown.
 
 
 

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