Pound Sees Relief in Forex Markets as Brexit Deal on the Horizon

Camila Martinez

brexit signBritish pound sterling traders were enjoying a boost in the currency’s fortunes on Monday after the currency’s value rose in the face of positive Brexit-related news.

According to a report published in the Sunday Times newspaper over the weekend, a customs deal has been proposed covering the whole of the UK – including Northern Ireland, which is part of Britain but shares a geographical border with the Republic of Ireland.

The news sent both the euro and the pound up on Monday. The pound managed to rise to $1.3062 as trading began on Monday, which is its highest position since October 22nd.

The dollar index, a tool which measures the greenback’s performance in relation to other major currencies, was down slightly and traded at 96.45. This was in large part due to the performance of the pound and the euro, which when combined comprise almost three-quarters of the index’s value.

In other global developments, there was no rise on the horizon for the Japanese yen, which traded at 113.18 compared to the US dollar as trading began.

Elsewhere in Asia, the offshore Chinese yuan saw a slight rise to 6.8948 compared to the US dollar – a development which comes on the back of renewed optimism around whether or not a trade deal between the two nations can be reached.

As a new trading week gets underway, traders are likely to be kept on their toes by a busy economic calendar.

This afternoon sees a major speech from Stephen Poloz, who is the governor of the Bank of Canada. This takes place at 1.10pm GMT.

Following that, there’ll be a series of key data releases out of the US. The Markit PMI Composite for October is out at 2.45pm GMT, while the Markit Services PMI will be out at the same time.

Looking to tomorrow, the midterm elections will take place in the US.

With a possibility of the Democrats taking control of the Senate from Donald Trump’s Republicans, there is a chance of political instability for the dollar over the course of the day and into Wednesday.

Also, tomorrow will be the interest rate decision from the Reserve Bank of Australia, due out at 3.30am GMT. It is expected to remain steady at 1.5%.

Market data for various European countries is due out from 8am GMT onwards. Spanish services PMI data for October is expected at 8.15am, while French PMI composite information will follow at 8.50am.

Employment change data covering the third quarter of the year is expected out of New Zealand at 9.45pm GMT. The figure is expected to hold steady, though, at 1.5%.

On Wednesday, the UK will see Halifax house price data covering October at 8.30am GMT. At 10am GMT, European retail sales information covering September will be released.

All eyes will be back on New Zealand at 8pm GMT, when the country’s Reserve Bank makes its interest rate decision announcement. As with its neighbour Australia, the rate is expected to stay the same – although this particular rate is 1.75% instead.

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Camila Martinez
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