The Pound Sterling exchange rate made healthy gains against a host of other currency majors on Monday, including the Euro (GBP/EUR), US Dollar (GBP/USD), and Australian Dollar (GBP/AUD).
The British Pound enjoyed gains off the back of EU chief negotiator Michel Barnier commenting that he thought Brexit talks could be close to a breakthrough. Barnier also used a cautious tone when he reminded that a deal hadn’t been locked in and a ‘major moment of truth is approaching’ at a conference today.
On the topic of Brexit, Barnier has been quoted as saying:
‘We’re going to have to come up with a Free Trade Agreement with the UK… The UK will lose out on the advantages of the Single Market, this is a certainty. There’s no punishment, many of us regret the decision of the UK to leave. We will not accept the watering down of the Single Market as a result of this.’
Theresa May has been given a deadline of December 4th to improve her offer to the European Union before Brexit talks can continue. May must address issues such as the final divorce settlement, the rights of EU citizens, and the Irish border. EU leaders will need to agree that ‘significant progress’ has been made before negotiations can progress on 14th December at the European Council.
The Irish border issue has come to light recently as Dublin places pressure for better guarantees on the topic. Ireland is one of the most crucial obstacles in the way for May as the Irish government is thus far unhappy with the available options to ensure a hard border with Northern Ireland isn’t implemented.
On the topic of Brexit, May has said:
‘There are still issues across the various matters we are negotiating on to be resolved, but there has been a very positive atmosphere in the talks and a genuine feeling that we want to move forward together.’
Meanwhile, the Euro received some positive news when in Germany the Social Democrats agreed to discuss the possibility of a coalition government with Chancellor Angela Merkel, making the possibility of fresh elections less likely. There’s a slew of influential Eurozone and German data out this week which markets will eye carefully.
The US Dollar could be in for an interesting week ahead with several pieces of highly influential data due out. The US Gross Domestic Product (GDP) growth rate will emerge on Wednesday, followed by Personal Income and Personal Spending stats on Thursday, and Friday will close the week with the ISM Manufacturing Purchasing Managers’ Index (PMI).
The Australian Dollar is likely to rely on movements elsewhere to determine its value with domestic data only being released on Thursday this week in the form of New Home Sales, Private Sector Credit, Building Permits, Private Capital Expenditure, and the AIG Manufacturing Index.
The GBP/EUR exchange rate is currently trending at Interbank levels of 1.1194. The GBP/USD currency pair is trading at 1.3340. The GBP/AUD exchange rate is hovering around 1.7504.