Brexit deal optimism boosts GBP

Sterling remained supported by positive Brexit headlines. Brexit and US CPI are in focus today.

Previous Day's Market Highlights

The pound briefly softened around the release of mixed production and trade data and flat growth in August (although the rolling three-month rate was unchanged at 0.7%). However, it otherwise remained supported by more positive Brexit sentiment following recent headlines indicating progress on a deal. This kept sterling-euro above 1.14, hitting fresh highs since June, and allowed sterling-dollar to break 1.32 to hit its highest levels since 21 September.
 
US equity markets fell the most in eight months as tech shares declined. US ten-year yields fell as investors turned to less risky assets. Earlier PPI data was in line with expectations, supporting Fed rate hike expectations.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1429 1.1463 1.1112 3.06%
GBP/USD 1.3194 1.3298 1.2922 2.83%
EUR/USD 1.1544 1.1815 1.1436 3.21%
GBP/AUD 1.8648 1.8735 1.7937 4.26%
GBP/NZD 2.0375 2.0481 1.9554 4.53%
GBP/CAD 1.7200 1.7286 1.6598 3.98%

Today's Market Highlights

Markets will keep an eye on today’s speeches for any monetary policy insights. BoE Governor Carney will participate in a panel discussion on “Scaling Up Green Finance—The New Role of Regulators and Central Banks” (10:00 BST). MPC Member Vlieghe is speaking on “Global and Domestic Challenges for UK Monetary Policy”, which may have more of a market impact (11:45).
 
Overall, Brexit headlines will remain the key driver for the pound; in particular, markets will be watching to see whether the latest round of positive Brexit headlines can be sustained. A pick-up in core US CPI could outweigh a softer headline figure and generally support the dollar and rate hike expectations.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP BoE Credit Conditions Survey
10:00am GBP BoE Governor Carney Speaks
11:45am GBP MPC Member Vlieghe Speaks
12:30pm EUR ECB Meeting Accounts
1:30pm USD Initial Jobless Claims 206K 207K
1:30pm USD CPI YoY (Sep) 2.4% 2.7%
1:30pm USD Core CPI YoY (Sep) 2.3% 2.2%
1:30pm CAD New Housing Price Index YoY (Aug) 0.5% 0.5%
4:00pm USD EIA Crude Oil Inventories (5 Oct) 2.647M 7.975M
1:30am AUD Financial Stability Review
1:30am AUD Home Loans (Aug) 0.1% 0.4%
1:30am AUD Investment Lending for Home Loans (Aug) -1.3%

Caxton