Market Info

GBP higher ahead of fifth round of Brexit Negotiations

10/10/2017 | OzForex

United States Dollar:

GBP/USD rebounded through yesterday and overnight trading as speculation subsided that UK PM Theresa May would step down, plus comments from a meeting between UK Business leaders and the Prime Minister quoted May as stating Companies should think a 2-Year transition period is assured. Ms May also gave further details for the UK’s Brexit options at Parliament and called for a creative economic solution that would be unique to the UK but the government is planning for every eventuality including the possibility of a ‘no deal’. While she maintains ‘real and tangible’ progress has been made in Brexit Negotiations, it seems we are still at point one relating to the size of the UK’s divorce bill and negotiations will not move forward until this point has been agreed.

In terms of data, the US Columbus day bank holiday meant no news from across the pond while the UK docket had only British Retail Consortiums’ like-for-like retail sales numbers. The figures showed retail sales rose 1.9% in September with much of the growth being down to price rises for food and clothing, driven up by the weak pound.

Looking ahead to today, the fifth round of Brexit Negotiations begin (as mentioned above) while on the data front markets look towards UK Manufacturing and Industrial production plus construction output for direction. Monthly Manufacturing production is expected to show a small contraction to 0.3% vs 0.5% previously while the sale monthly figures for industrial production are predicted to hold at 0.2%.

We expect a range today in the GBP/USD1.3115 and 1.3250


GBP/EUR also enjoyed a rebound from last week’s declines, pulling back to an interbank high of 1.1223 in early trading. This was despite early news that annualised German Industrial production rose to 4.7% from a revised figure of 4.2%. Monthly numbers showed a stark turnaround to 2.6% vs a decline of 0.1% previously. Overnight Sterling Euro has traded a quarter-cent interbank range between 1.1177 and 1.1202.

EUR/USD initially fell at the start of this week’s trading but the highly improved German Industrial production figures helped the single currency move back above an interbank level of 1.1750. With the US bank holiday, no further data was released and the pair bounced between a 30 pip range in overnight trading.

Investors will today look towards the outcomes of the fifth round of Brexit negotiations plus UK Manufacturing / Industrial / Construction PMI and the National Institute of Economic and Social research UK GDP estimates.

We expect a range today in the GBP/EUR rate of 1.1115 and 1.1245

Aussie and Kiwi Dollars:

The Aussie dollar had a bit of a mixed bag, gaining against the US dollar while giving up ground against Sterling. Overnight National Australia Bank business surveys reported strong business conditions and confidence plus a marginal improvement in consumer sentiment. Despite the news GBP/AUD gapped to an interbank high of 1.6989, nearly two cents higher than the closeout rate at the end of last week. In the early hours of tomorrow morning, Westpac releases their own survey of consumer confidence but the main driver will be U data due today.

Election uncertainty pushed the NZD lower against most currencies as the final block of votes, from the stalemate elections on the 23rd September, bolstered the opposition labour party but still left neither party with a majority to form a government. This will likely undermine the New Zealand dollar as both parties now try to form a coalition.

We expect a range today in the GBP/AUD rate of 1.6850 to 1.7050

We expect a range today in the GBP/NZD rate of 1.8575 to 1.8775

Data Releases

AUD: Westpac Consumer Confidence

EUR: No Data

GBP: Manufacturing Production, Industrial Production, Construction Output, Trade Balance

NZD: No Data

USD: FOMC Member Kashkari speech


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