Pound sky-rockets, U.S. Dollar wanes with optimism

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Pound sky-rockets, U.S. Dollar wanes with optimism

OCTOBER 11, 2019

The U.S. Dollar is nearing a loss of about 1.0% for the week as prospects of deals that could resolve trade conflicts have improved significantly overnight.

Overview

On one hand, the European Union negotiators seem willing to go back to the negotiating table with a potential of striking a trade deal with the U.K. Naturally, the Pound’s value has jumped by over 2.5% and other currencies are following as Brexit has been determined to be a major worry for global trade dynamics. Along with those developments, U.S.-China talks are reportedly going well with President Donald Trump agreeing on the progress.

We shall gauge confidence in the economy at 10AM with the release of the University of Michigan Consumer Sentiment survey which is expected to be a downer for the month of September after August represented the lowest level of optimism in two years. Monday is a banking holiday but will be followed by close monitoring of talks in both regions and a slew of data that can have some impact as we try to understand how much the economy is slowing down with sales and housing figures.

What to Watch Today…

  • University of Michigan Wolverines Consumer  Sentiment 10 AM

A complete Economic Calendar can be found here.

EUR

The Pound is at its highest level in three months after major changes to the depressing state of Brexit negotiations. Prime Minister Boris Johnson met with his Irish counterpart who spoke about the ability to move forward and strike a deal with the EU. Apparently, the concessions provided are enough from his end as the border and its control has been some of the bigger obstacles in passing anything through the British Parliament.

On the EU end, Michel Barnier, the chief negotiator of Brexit, has been given the go-ahead to engage in “tunnel” negotiations, which refers to meeting with no media around to perform carefully the necessary legal work. We shall see if the long weekend provides regression or further cause for jubilation. We expect Sterling to rise rapidly as details and clarity are laid out.

GBP

The Pound fell by over 1.0% yesterday as indicators kept shedding away at the idea the U.K. economy remains strong during Brexit talks. The May 10th meeting for the Bank of England is looking to be a gloomy one as PMI figures in the U.K. marked a 17-month low for April.

In addition to low GDP, manufacturers are struggling to achieve much in terms of new expenses, investment, or hiring. Sterling remains near its lowest point of 2018 and was falling at the time of writing.

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