- Pound reaches over two-year highs against NZD and AUD
- Euro under pressure from German data disappointments
- What to watch in the week ahead…
By Joe De Berniere
Pound reaches over two-year highs against NZD and AUD
The Pound rose a respectable 1.43% last week against the Euro, climbing from 1.1379 to a new three-and-a-half month high, recorded at 1.1392. Sterling also reached 2.04 versus the New Zealand Dollar and 1.86 against the Australian Dollar – both the highest levels since June 2016. Positive potential Brexit deal headlines and a steady-as-she goes Conservative Party conference speech by UK Prime Minister, Theresa May, appear to have been amongst the catalysts for the rise, with markets increasingly confident that the EU and UK will strike a Brexit deal before the end of the year.
Euro under pressure from German data disappointments
The Euro, meanwhile, was pressured by negative economic data from Germany and continued concerns surrounding Italy and its budget deficit. Over the weekend, the President of the European Commission, Jean-Claude Juncker, said he is sure a Brexit agreement could be reached in November, if not sooner. He told three Austrian newspapers that Brexit without a deal ‘would not be good for the UK, as it is for the rest of the union.’ At the moment, there appears to be a lot of support for a Canada plus-style arrangement, even from within the Conservative Party, so, if well received, this would be a big moment for the Brexit negotiations. The question of the Irish border remains a sticking point, although Tusk and Ireland’s deputy Prime Minister said it is 90 percent agreed.
What to watch in the week ahead…
• Keep watching for ongoing Brexit news and signs that a deal is around the corner. Any positivity could help boost the Pound.
• The German trade balance figures will be tomorrow, and, like other important economic announcements for Germany, could affect the Euro.
• The UK Gross Domestic Product (GDP) results are also due this week, offering more signs and signals for Sterling.
• There will be key US manufacturing, consumer and pricing data releases on Wednesday and Thursday.
On Friday, the Chinese Trade Balance data has the power to move markets in Asia Pacific, particularly the Australian Dollar.
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