Positive news for the Pound….but not for long
The Governor of the Bank of England (BoE) made a positive comment about Brexit. Lordy be! Mark Carney said the UK financial sector, which is hugely important to the UK economy, could be freed from red tape after Brexit and is likely to grow much faster as a result. That, plus the rumours that a deal had been struck over the size of the Brexit divorce deal, boosted the Pound yesterday. Sterling hit some of its strongest levels since June. However, the Pound has slipped overnight, as risks were highlighted over the Irish border and a potential rebellion over the amount of money the UK might pledge to the EU just to get out.
There is an unmistakable and rather distasteful pomposity about the EU negotiators telling Theresa May that she has to come back with a revised offer by 4th
December and an air of panic-stricken desperation amongst the UK press as they clamour to tell us how weak the UK negotiating position is. I really hope May and Davis aren’t as subservient in Brexit negotiation meetings as the press and opposition leaders would wish them to be.
What next for the Pound and the Euro?
Technically speaking, the GBPEUR exchange rate has significant EUR buying levels around €1.14 and that capped the market yesterday. The GBPUSD exchange rate had resistance around $1.3450 but that appears to have given way and there is scope for a rally to $1.3650 and maybe even $1.39.
Sterling is stronger against most currencies but, as with the EUR, it has given up some of its gains overnight. The day ahead includes a swathe of Eurozone data; most interesting of which is the Manufacturing Purchasing Managers’ Index (PMI), and the German national version of that index as well, both of which came out at close to record highs once again. The UK Manufacturing PMI
results were equally impressive, showing a significant improvement on last month’s figure and growth at four-year highs.
Key Canadian data expected today
This afternoon brings a wave of data from Canada. That includes Gross Domestic Product (GDP) data for September, the forecast for which is quite poor. That has probably been priced into the value of the Canadian Dollar, which has weakened over the last couple of days. Hence, anything better than 1.6% growth on the month will boost the Canadian Dollar. We will also get the unemployment rate for Canada, which might just dip back down to 6.2% after a blip up last month.
And then it is the weekend. Christmas is just 24 days away, so the pressie buying starts to get serious now. People have drawn their secret Santa names and are wracking their brains over what to get Kyle in IT, who has no interest in anything other than computer games and black T-shirts. Oh the joys of the season to be jolly!