30/08/2018 – Brexit Deal Optimisim Sparks Sterling Rally

GBP

The pound surged yesterday after the EU’s chief negotiator Michel Barnier appeared to offer a breakthrough on Brexit, saying the bloc was prepared to offer Britain an unprecedentedly close relationship after it quits the EU, but it would not permit anything that weakened the body’s single market. The EU will not permit anything that damages its single market. “In return, they must respect what we are. Single market means single market. There is no single market a la carte.” Sterling climbed more than one per cent higher on the news.

Britain’s Brexit minister Dominic Raab said he was confident that a deal was “within our sights”, although he added that there was “some measure of leeway” on the October timetable. Brexit secretary Dominic Raab, who travels to Brussels on Thursday for a meeting with Barnier on Friday, appeared before the Lords’ European Union select committee, reiterating the government’s view that a deal was still possible.

USD

U.S. economic growth was a bit stronger than initially thought in the second quarter, notching its best performance in nearly four years and putting the economy on track to hit the Trump administration’s goal of 3 percent annual growth.

Gross domestic product increased at a 4.2 percent annualized rate, the Commerce Department said on Wednesday in its second estimate of GDP growth for the April-June quarter. That was slightly up from the 4.1 percent pace of expansion reported in July and was the fastest rate since the third quarter of 2014.

Growth in the second quarter was driven by one-off factors such as a $1.5 trillion tax cut package, which provided a boost to consumer spending after a lackluster first quarter, advance orders of soybean exports to China to beat retaliatory trade tariffs also helped the figure.

Key Announcements

13:30 – USD: US Core consumption expenditure (July) Expected to increase to 2.0% from 1.9%