Sterling (GBP) Strengthens as Brexit Optimism Grows
24 Jan 2018
Published in: The Chamber Patron Group
Please find RationalFX's daily market report for today together with all the economic data/times for today's event(s):
Sterling climbed further on Tuesday as news came out that the UK already "agreed in principle" to a Norway-style Brexit transition period in which it accepts all EU rules with no power to shape them. A key member of the European Parliament's Brexit team said British negotiators raised no objections to the plans, which would mean accepting free movement and customs union rules, and falling under the European Court's jurisdiction. Sterling powered to reach its highest level since the vote to leave the European Union in June 2016 on Tuesday, extending a rally on the back of growing optimism around Britain's chances of securing a favourable Brexit deal.
Analysts said although there had been little in the way of solid developments around Britain's exit from the EU since the start of the year, the noises coming from Europe had appeared to be largely positive, and sterling was more sensitive to good news than bad. Currency traders believe the mood in London and Brussels suggests both sides are more amenable to hammering out a transition agreement between Britain and the trading bloc, and then an eventual deal for the terms of departure.
The dollar slipped to a fresh three-year low against a basket of currencies on Tuesday after data showed euro zone consumer confidence jumped much more than expected in January, underlining the strong momentum in the euro zone economy.
The European Commission said consumer confidence in the 19 euro zone countries in January rose to 1.3 points from 0.5 point in December, well above the market consensus of a rise to 0.6. The euro has rallied this year, boosted by growing optimism that a strengthening economy would prompt the European Central Bank to signal a quicker exit from its years of efforts to stimulate the economy than previously forecast.
- 09.30 - GBP: Average Earnings Index 3m/y; Forecast the same as previous at 2.5%
- 15.30 - USD: Crude Oil Inventories
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