Sterling is on the rise following rumours that a post-Brexit trade deal may soon be agreed by the UK and EU. Markets became particularly excited when BBC Newsnight Political Editor Nicholas Watt tweeted “big buzz in the last hour among Tory MPs that the UK is heading towards a Brexit deal with the EU”. Also helping the Pound is reports that “MPs have been put on standby for an extended House of Commons sitting next week, as hopes rise in Westminster that a post-Brexit trade deal with the EU could be ready for approval before Christmas”.
The markets upbeat sentiment enabled GBPUSD to reach above 1.34 yesterday after starting the day in the low 1.33’s. The pair opened the session trading at 1.3323 and spent most of the day moving steadily towards the 1.34 handle. Just after 16:00 GMT cable was able to surpass 1.34 and closed the day finally at 1.3432. Since more ‘positive’ news on Brexit has been released, the pair this morning is trading just above the 1.35 mark – which is more than a percent above where it opened yesterday.
GBPEUR also was also able to capitalize on Sterling’s new-found, Brexit-induced vigour. The pair opened the session in the 1.09’s at 1.0973, but was able to move out of this range and close the day strong at 1.1049.
While the Financial Times reports that “Downing Street and European diplomats insist negotiations are still stuck in crucial areas… and that a no-deal scenario was still the most likely outcome”, Ursula von der Leyen has said this morning “that there is a path to an agreement now”. President of the European Commission went on to add that “as things stand, I cannot tell you whether there will be a deal or not” but “we have found a way forward on most issues but two issues still remain outstanding: the level playing field and fisheries”. Von der Leyen was happy “to report that issues linked to governance now have largely been resolved. The next days are going to be decisive”. Despite finding common ground on governance, von der Leyen also commented on fisheries, noting that “the discussion is still very difficult” and fears that “we will not be able to resolve these questions.”
Despite the Pound dominating recent headlines, EURUSD has managed to reach a 7-month high by surpassing the 1.22 mark. The pair opened at 1.2142 yesterday and traded subtly throughout the session, closing at 1.2156. However, the pair took a sharp rise this morning as markets predict Fed volatility and USD weakness. The pair managed to reach a high of 1.2212 at 08:53 GMT.
