Pound Wins the Daily Forex Markets as Brexit Deal on the Horizon

Jacob Friedman

British pound sterling in couns and bank notes. The pound had a great day in the foreign exchange markets yesterday as it was announced that a draft deal between the European Union and Britain on the terms of the latter’s exit from the bloc had been reached.

The news sent the GBP/USD pair up by 0.79% to $1.2950.

However, the battle is not over yet. Prime Minister Theresa May now needs to persuade her own Cabinet that the deal is the right move – and there may be political instability ahead as she navigates these potentially tricky waters.

Some of her MPs have expressed concern over the announcement.

“It is a quite incredible state of affairs, it will mean that we are having to accept rules and regulations from Brussels over which we have no say ourselves”, said Boris Johnson, who resigned over Brexit-related issues earlier in the year.

When he resigned, the value of the pound dropped almost 0.8% against the dollar, suggesting that the currency is still vulnerable to political problems.

The news also meant there was a rise for the euro, too. It went up by 0.35% to $1.1258 against the US dollar.

The dollar itself, meanwhile, had a largely flat day. The dollar index, a tool used to monitor the greenback’s relative position compared to other major global currencies, went down by 0.2% and hit 97.19.

The rest of the week holds a significant number of economic calendar releases for traders to keep their eyes on.

Today sees European industrial production data for September, which is out at 10am GMT. This is expected to show a year on year change from 0.9% to 0.3%.

Employment change data will be out at the same time, although this will cover the second quarter of the year. This is predicted by analysts to remain steady year on year, at 1.5%.

The main event of the day is likely to be the US consumer price index for October excluding food and energy, which is due out at 1.30pm GMT. This is forecast to stay the same year on year, at 2.2%.

The overall consumer price index for October will be out at the same time, and this is expected to show a year on year rise from 2.3% to 2.5%.

This potential positive development for the dollar is likely to be interpreted as a further sign that interest rates will rise as the US economy surges on.

On Thursday, the Chinese house price index for October is expected to be released at 1.30am GMT.

More US data is due out at 1.30pm GMT, such as the retail sales figures (excluding autos) covering October. Month on month, these are also expected to rise from -0.1% to 0.5%.

Initial jobless claims from the US will be out at the same time. This week, these are expected to drop from 214,000 to 212,000.

The run of forecasted positive statistics, however, is expected to take a break here. Continuing jobless claims are predicted to rise slightly, from 1,623,000 to 1,630,000.

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Jacob Friedman
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