Hopes of Brexit breakthrough boost pound
[vc_row][vc_column][vc_column_text]Increased hopes for a Brexit deal encouraged the pound to push higher across the board last week, even though UK data demonstrated fresh signs of weakness.
Solid US data continued to boost the case for the Federal Reserve to raise interest rates again before the end of the year, keeping the US dollar on a generally stronger footing.
Confidence in the euro, meanwhile, fluctuated in response to persistent worries over Italian budget plans and the escalating conflict between Italy’s government and the EU.
A fresh decline in market risk appetite left both the Australian and New Zealand dollars biased to the downside, with both antipodean currencies lacking the support of any compelling domestic data.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Signs of progress on Irish border issue encourage pound gains
As reports emerged that Ireland was willing to back Theresa May’s latest customs proposals, potentially resolving the Irish border issue, the mood towards the pound naturally improved.
While September’s UK services PMI fell short of forecasts, easing from 54.3 to 53.9, this failed to weigh GBP exchange rates down for long.
Investors were quick to shrug off this latest sign of slowing economic momentum in favour of Brexit-based optimism.
With worries over a potential leadership challenge against Theresa May easing in the wake of her closing speech at the Conservative Party conference the appeal of the pound strengthened.
However, GBP exchange rates look vulnerable to losses in the days ahead as confidence in the outlook of the UK economy remains fragile.
As forecasts point towards a slowdown in August’s monthly gross domestic product release, which is expected to slip from 0.3% to just 0.1%, the pound could diminish sharply.
Any indication that the economy is losing further momentum in the second half of the year should leave the pound lacking in support.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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* Information courtesy of Currencies Direct, Philip McHugh
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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