Optimism over trade deal lifts sterling
Sterling rallied against both the euro and dollar yesterday amid increased optimism amongst investors that this weeks trade talks will finally yield some progress and form the basis of a trade deal.
The increased optimism amongst investors has been caused by a shift in tone in talks from both sides. Last week, reports citing a European source claimed that the European Union are “open to a thin trade deal” and praised Johnson for creating a “more open atmosphere for talks”. Whilst UK minister Michael Gove acknowledged a willingness from the UK government to overcome its difficulties to secure a free trade deal with the EU.
Sterling reacted positively during early trade rallying to just over 1% against both the euro and dollar. But retraced slightly yesterday afternoon as an EU official talked down recent optimism claiming that the “UK and EU remain some way apart”.
In addition to this, Sterling was offered a level of support from Bank of England Deputy Governor Dave Ramsden. Ramsden further dampened investor expectations of the imminent use of negative interest rates by stating that he felt the floor for the banks key interest rate was 0.1%.
- 13:00 – EUR – Harmonized Index of Consumer Prices (YoY (SEP)
- 15:00 – GBP – Bank of England Governor Bailey Speech
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