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 – Opportunity for a weaker Dollar
Charles Porter
Thu 1 Jun 2023
Opportunity for a weaker Dollar The passing of month-end allows markets an opportunity to reassess currency valuations. Despite a cooling off within the Dollar as forecasted following the agreement between the White House and Kevin McCarthy, month end flows yesterday showed favourable conditions for a short-term Dollar resurgence. The beginning of June coincided with headlines […]
Morning Brief – Turkish Lira
Humphrey Percy
Wed 31 May 2023
Turkish Lira While President Erdogan removed the uncertainty overhanging the Turkish market by winning the election in the run off over the weekend, the news served to cement the certainty that nothing much was likely to change with respect to Turkish economic policy or indeed the subservient role of the Central Bank of Turkey to […]
Morning Brief – Did EURUSD miss the news?
Charles Porter
Tue 30 May 2023
Did EURUSD miss the news? Over the weekend, the President and the Speaker of the House of Representatives reached a much-awaited deal on the US debt ceiling. The impending constraint on debt could have forced the shutdown of government departments and precluded the US government from servicing costs and existing debts, triggering a default. The […]
