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:
Discussion and Analysis by Charles Porter
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