Foreign Exchange Daily Market Update 01/12/2017

Fri, December 01, 2017

Sterling jumps 1% as confidence grows on Brexit talks, while the Dollar weakens.

Sterling rallied about 1% as confidence of progress in the Brexit negotiations improved and broad dollar weakness.

Sterling rallied earlier as Britain and the European Union were close to an agreement on the future Irish border, a hurdle toward moving to trade talks.

Positive signs of a possible breakthrough on the Brexit divorce bill ahead of a key meeting next week, has brought forward pricing for the next Bank of England rate increase to September from November 2018. Still it is believed.

As each hurdle is cleared, the pound might start to get a bit stronger until we get to the final huge hurdle, which will be the vote in the U.K. and EU parliaments to decide whether the final agreement is acceptable. Steven Barrow, Standard Bank’s head of currency strategy, wrote in a research note.

While a preliminary agreement on the Brexit bill has been reportedly reached by negotiators, Britain and the EU are now working on a compromise over the Irish border before a meeting on Monday between Prime Minister Theresa May and European Commission President Jean-Claude Juncker. Sterling is likely to see sharp peaks and troughs as the Brexit saga continues.

Sterling climbed to $1.3549 against the dollar, the strongest level since Sept 25. It gained 0.3% to 1.1235 against the euro yesterday evening.

Data to look out today.   

15:00 USD Manufacturing PMI.

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