Foreign Exchange Daily Market Update 01/11/18

Thu, November 01, 2018

The pound rose as reports that the Banks are to get EU access after Brexit.

Sterling strengthened after the Times reported Brexit negotiators have provisionally agreed to give U.K. financial services firms continued access to the EU markets after Britain leaves.

The pound rose by as much as 1.1% as the prospect of a full Brexit agreement was seen reducing economic uncertainty. That is bringing forward expectations for an interest-rate hike next year, just before the BOE announces its latest policy decision and inflation outlook later today.

Sterling had strengthened sharply over night driven by increased optimism that the EU and U.K. are closer to a Brexit deal than generally feared. The positive Brexit headlines have provided a more supportive backdrop for the pound heading into today’s BOE policy meeting. U.K. Brexit Secretary expects a deal to be finalized by Nov. 21.

Analysis have bought forward when they expect the next rate hike to be in November 2019, from February 2020 on Tuesday. That is still later than markets were expecting just a month ago amid increased fears of a no-deal Brexit.

Sterling rose 1.1% to $1.2905 this morning against the dollar, the pound rose to 1.1328 against the Euro.

Data to look out today.   

12:30 GBP Carney speaks at press conference.

14:00 USD Manufacturing

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