Barnier’s Brexit Boost:
The Rand has given back some of the strength it gained on the back of yesterday’s pivotal ministerial resignation. Succumbing to heavy Dollar purchasing, emerging market currencies traded down at the index level throughout the day. Sterling had the headline performance of the day, receiving a late-session boost once again, surprise surprise, from Brexit. Today’s speech by Chief EU negotiator Michel Barnier on a potential Customs Union between the UK and the European Union saw Sterling gain as much as one quarter of one percent. The main effect of positive Brexit sentiment was felt within cable (GBPUSD), with the pair breaking back above 1.32 for the first time this month. In his speech to European lawmakers, Barnier confirmed that intense negotiations continue “day and night”, and also set forth the kind of deal the UK might expect to sign as early as next month. Displayed in the diagram below, Barnier explained to the Council and Commission what the UK must concede in order to achieve the kind of trade deals we’ve heard so much about; from European Economic Area membership, through Swiss, to Canadian style. The Pound gained considerable value because it is the first speech where the EU chief negotiator has made the ball appear as if it is distinctly within May’s court, demonstrating to markets that UK negotiations are well and alive. EURGBP staggered below 0.8750 amidst the news, limited in displacement by the concomitant boost the European single currency also received from trade deal optimism.
Since Market Open:
- GBP: GDP data paving the way for the best quarterly domestic growth rate in two years failed to move the Pound at 9:30 this morning; Barnier to the rescue for overly bullish traders!
- EUR: The Euro received a sizeable bid on the back of post-Brexit trade optimism. Contracting bond yields in Italy also helped support the single currency.
- USD: Heavy buying pressure continues for the global hegemon despite people continuing to question the Dollar’s place in the world.
- EM: The Rand joins emerging markets in a downturn; Dollar-Yuan continues to hold below 7.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Morning Brief – Global Trade Trends
Humphrey Percy
Mon 30 Jan 2023
Global Trade Trends Following Covid, Lock Down, Supply Chain issues and the trade war between China and the USA, while globalisation may not have ended, it is being replaced in significant part by what some economists are naming fragmentation which is the handle given to countries moving production of goods to manufacturing centres nearer to […]
Morning Brief – Inflation
Humphrey Percy
Fri 27 Jan 2023
Inflation With markets as ever getting ahead of themselves by many having decided that the inflation peak is a yesterday thing, there is a dawning realisation that with the current levels of USA 6.5%, 9.2% UK and 10.4% EU as at Dec 2022, inflation is not only well above target of 2% but is still […]
Morning Brief – A big week indeed
Charles Porter
Tue 31 Jan 2023
A big week indeed Normally the first week of any new month is relatively significant. There is typically an above average volume of data releases with the notable non-farm payrolls in the United States normally the figure analysts are looking out most closely for. February will prove to be no exception with a significant load […]
