The Pound had a turbulent session yesterday after the markets awaited positive news on Brexit and were left disappointed after Theresa May and Jean-Claude Juncker confirmed no deal had been agreed over the issue of an Irish border.
The meetings success hinged on a compromise on the volatile question of the U.K.’s frontier with Ireland, one of its land borders with the European Union as well as its financial obligation to the bloc and the rights of its citizens.
Juncker said after a much-delayed press conference this afternoon: "Despite our best efforts, and significant progress that our teams have made over the past few days, it was not possible to reach complete agreement today. We have narrowed our positions hugely today," he added. "I am still confident we can reach significant progress before 15 December. This is not failure."
It is thought a phone call between May and DUP leader Arlene Foster, which took place after a proposed solution to the Irish border question emerged, is behind the scuppered deal. In the morning it was revealed that Juncker had shown some MEPs a draft version of an agreement that talked of "regulatory alignment" between Northern Ireland and the Republic of Ireland after Brexit, which would avoid the need for a hard border.
However, that proposal was rejected by the DUP, with Foster saying she would not accept any regulatory divergence from the rest of the UK. Journalists understand that May spoke with Foster after the Northern Irish leader's press conference, which then put an end to hopes for a deal today.
Early on in the session data revealed the UK’s Construction sector grew at its fastest rate in five months driven by an increase in house building.
Greece provided some positive sentiment for the single currency after their economy expanded for a third straight quarter for the first time in more than a decade, providing a foundation for the country’s attempts to exit its bailout program next year.
Gross domestic product grew 0.3 percent in the three months through September the Hellenic Statistical Authority said yesterday. Greece’s government and representatives of the country’s creditor institutions on Saturday agreed on a set of economic overhauls the country must undertake in exchange for fresh loans. The pay out, supplemented by more bond market forays next year, will help the government build a cash buffer as it seeks to prepare for its bailout exit when the current program expires in August 2018.
09:30 – GBP – Services PMI expected to decrease to 55.2
15:00 – USD – ISM Non-manufacturing PMI is expected to decrease to 59.2.