Sterling Swings on Brexit Deal Hopes & Disappointments

The pound swung yesterday on hope and then disappointment that the UK & EU would reach a deal. Politics and Services data are in focus.

Previous Day's Market Highlights

After initial weakness on concerns that the day’s Brexit meetings would result in no deal, the pound rallied on reports that a breakthrough was near. However, those gains were later reversed when the UK and EU failed to come to a deal after the DUP opposed plans for the Irish border.
 
Sterling-euro correspondingly reversed gains above 1.1400 and sterling-dollar gains above 1.3500. Sterling also tested or regained and then lost the following levels: 1.7800 against the Aussie, 1.9700 against the kiwi, and 1.7100 against the Canadian dollar.
 
Of secondary interest were the day’s limited economic releases. The UK’s Construction PMI jumped to 53.1 from 50.8 but had limited impact. US Factory Orders declined less than expected in October and the Eurozone Producer Price Index slowed in October.
 
The Aussie gained after the Current Account deficit came in narrower than expected, Retail Sales picked up m/m, and the RBA emphasised its expectations for rising inflation and growth as it kept the benchmark interest rate on hold at 1.5%, as was expected. The kiwi also made gains after a speech from RBNZ Deputy Governor Spencer.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1308 1.1394 1.1092 2.65%
GBP / USD 1.3410 1.3550 1.3039 3.77%
EUR / USD 1.1858 1.1961 1.1553 3.41%
GBP/AUD 1.7559 1.7910 1.6924 5.51%
GBP / NZD 1.9481 1.9836 1.8787 5.29%
GBP / CAD 1.6984 1.7468 1.6589 5.03%

Today's Market Highlights

Following yesterday’s failure to come to a deal, Brexit headlines will remain a key driver of the pound ahead of next week’s EU Summit, the date by which the UK and the EU still hope to have ironed out the divorce terms. Also of interest will be the Services PMI (09:30 GMT), a dip in which could add further pressure to the pound.
 
In the afternoon, US and Canadian trade data will be in focus (13:30 GMT), with a wider trade deficit expected from the US and a narrower one expected from Canada. The US’s ISM Non-Manufacturing PMI (15:00 GMT) is projected to slow, which may weigh on the dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Services PMI (Nov) 55.0 55.6
10:00 EUR Retail Sales MoM (Oct) -0.7% 0.7%
10:00 EUR Retail Sales YoY (Oct) 1.7% 3.7%
13:30 USD Trade Balance (Oct) $-47.5B $-43.5B
13:30 CAD Trade Balance (Oct) $-2.70B $-3.18B
NZD Global Dairy Trade Price Index -3.4%
14:45 USD Markit Services PMI (Nov) 55.4 54.7
15:00 USD ISM Non-Manufacturing PMI (Nov) 59.1 60.1
00:30 AUD GDP QoQ (Q3) 0.7% 0.8%
00:30 AUD GDP YoY (Q3) 3.0% 1.8%