GBP investors were shrewd to seize on the remarks, propelling GBP/USD to a new three-month high. However, the pairing naught to break through the $1.27 barrier, with some gains streamlined later in the afternoon when M Barnier warned that the final authorized text must be agreed tonight if a deal is to be in place for this week’s EU climax. M Barnier suggested there were three likely outcomes for talks: “A bargain tonight; an extension; or a breakdown.” Meanwhile, a gloomy UK jobs report small the upside potential of Sterling, with analysts warning that the British positions market “shows signs of slowing” after unemployment rose and wage vegetation slowed in August.
With all eyes fixed firmly on Brexit talks, GBP investors largely shrugged off the underwhelming data.
At the same time, the US dollar clashed to find support today amidst fading US-China trade optimism.
While sells initially welcomed this week’s announcement for a “phase 1” patronage deal by Donald Trump, optimism quickly turned to scepticism as a deficit of details and reports suggesting Beijing wanted more talks preceding the time when signing off on the deal undermined investor confidence.
Looking to the rest of the week, Brexit resolve continue to dominate GBP/USD exchange rate movement, especially as we approach an EU pinnacle on Thursday.
However GBP investors are also likely to keep their aims on Wednesday’s UK consumer price index which may lend some back up to Sterling if we see inflation accelerate again in September.
On the other side of the pond, the bimonthly of the US retail sales report may exert some pressure on the US dollar if tag sales growth slowed as suspected last month.