Following a downward trend of last week, Pound Sterling is edging higher, thanks to Brexit talks being 95 percent complete.
The slump seen last week was attributed to drops in the exchange rate, as well as unencouraging UK data. Although the news instils confidence in the market, there could still be changes that align with decisions made during the final Brexit negotiations,
As for of 23rd October 2018, GBP is trading at €1.135 against EUR.
The spikes were seen following the news that Michel Barnier, EU Brexit Negotiator, confirmed on French radio that 95% of the accord had been agreed with Britain. However, he did go onto say that while a was necessary, he wasn’t sure one would happen.
Conservative backbencher Steve Baker has sought an amendment to the Northern Ireland bill which would make the presence of Northern Ireland in another customs jurisdiction illegal.
This goes against the EU’s wishes for a backstop clause, which would see Ireland align with the EU customs regulations should no trading agreement be in place.
The amendments being proposed also go against the position of Prime Minister Theresa May’s approach, which did encourage the use of a backstop.
May did state that it no instance would the UK remain in EU for elongated periods, that would otherwise emulate still being present in the EU. This has been a keen worry for those invested in a hard Brexit.
May’s had offered an extended period, but also said that was undesirable, and that any transition period would have to end before May 2022.
Results Could Be Short-Lived
Although there is more being done to come up with the final Brexit agreement, there are still decisions to be made. If past news is anything to go by, GBP can fluctuate depending on decisions being made.
A Brexit summit has been cancelled as European leaders feel that there hasn’t been enough progress made. Although talks have been encouraging, the Irish birder remains a sticky wicket for the Prime Minister.
GBP/USD Shows a Strong Dollar
As of 23rd October, GBP/USD pair was trading at 1,2975.
The GBP/USD is something that could also continue to fluctuate, due to agreements being sought on both sides of the pond.
Relations between the US and China aren’t good, meaning that markets are concerned that trade wars could spiral out of control.
The semi-annual report on foreign exchange rates has been met with some positivity, as it didn’t mention China as a currency manipulator. However, the report did mention that the US was disappointed to learn that China has not been upfront about its foreign currency intervention.
There are US officials who are concerned that China has made Chines yuan weaker to counter the US tariffs on US goods. Although the situation will be monitored, it does showcase how much uncertainty there still is.