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November

Brexit boost for the Pound short-lived…

Published: Thursday 01 November 2018

  • Sterling volatility offers opportunities for buyers and sellers today
  • One to watch this afternoon
​​By Alastair Sweetman

 
Sterling rallied yesterday after Brexit Minister Dominic Raab said that he was hopeful of a deal with the EU on Brexit terms by 21st November. An EU official was also quoted as saying that he was more optimistic that a deal could be reached. Sterling was hovering at the 12 month low and the bounce was a little muted, as the news wasn’t really new. This morning, however, The Times has reported that UK PM Theresa May has agreed a tentative agreement with the EU on financial services. This would be very welcome news; and although the report is short on detail, the Pound surged over 1% ahead of this morning’s Manufacturing Purchasing Managers’ Index (PMI) data and the Bank of England (BoE) meeting this afternoon. This was short-lived, however, as the latest news is saying that the financial service deal report is “unsubstantiated”, with the Pound falling against the US Dollar once more. A disappointing drop in manufacturing growth in October released in today’s PMI report for the UK will not help support Sterling, either.

 
Sterling volatility offers opportunities for buyers and sellers today
 
Sterling will remain in focus today as we await an interest rate announcement from the Bank of England at midday. “Super Thursday” as it has been dubbed, will kick off with the rate decision, followed by the minutes of the meeting and the quarterly inflation report. Governor Mark Carney will then speak at a press conference at 12.30pm. The BoE is widely expected to leave interest rates on hold amid growing Brexit uncertainty and there is a risk that Mr Carney will reiterate the risks of a hard Brexit. Sterling could lose a little of its lustre if this is proved to be the case. On the flip side, if there is talk of increased inflation or any dissent from some of the other members of the Monetary Policy Committee (MPC), Sterling may rise. Either way, there should be some volatility in Sterling today, providing opportunities for both buyers and sellers. Get in touch to discuss making the most of and protecting your international payments during this period of volatility,
 
The Euro has fallen by almost 3% this month as the Italian budget has been rejected by the EU, with the Italian government refusing to back down. Political upheaval in Germany, as Angela Merkel announced that she would not be seeking to be re-elected and would stand down in 2021, has also weighed on the currency. There is little new data due to be released today for the Eurozone, so the Euro is likely to remain sidelined in the short term.
 
One to watch this afternoon
 
The focus of the day will be the BoE meeting at midday. Attention will then turn to US manufacturing data later today, ahead of a key benchmark of US employment, the Non-Farm Payroll report, on Friday.

Read this week’s currency market and economic round up for more insights and what else to look out for in the coming days.
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Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Manufacturing Purchasing Manager's Index 53.8 53.0
GBP 12:30 Bank of England Official Bank Rate 0.75% 0.75%
GBP 12:30 Bank of England Official Bank Rate Vote 0-0-9 0-0-9
GBP 12:30 Bank of England Monetary Policy Summary    
GBP 12:30 Bank of England Inflation Report    
GBP 12:30 Bank of England Asset Purchase Facility Votes 0-0-9 0-0-9
GBP 12:30 Bank of England Asset Purchase Facility 435b 435b
USD 12:30 US: Preliminary Non-Farm Productivity 2.9% 2.2%
USD 12:30 US: Unemployment Claims 215k 213k
USD 14:00 US: Manufacturing Purchasing Managers' Index 59.8 59.0

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news