The Pound exchange rate has begun Friday recouping some of the recent losses against the Euro (GBP/EUR) and US Dollar (GBP/USD). Today, markets are busy digesting the latest public sector finance figures, and the week’s Brexit developments.
Pound Exchange Rate Forecast: EU Extension Doesn’t Go Down Well at Home
With only 161 days to go until Brexit, Theresa May looks to be in an awkward position. The EU has deemed not enough progress has been made to hold a November summit. Meanwhile, May downplays the idea of an extended transition deal. This really only leaves the space between now and the January deadline to create a deal ahead of the March 29th Brexit day.
There had been such high hopes for this week’s Brexit summit. While no breakthroughs have been made, there’s some optimism that progress is happening. The UK and EU seem to think there’s good reason to extend the UK’s transition period beyond December 2020 to iron out all the details. This would offer both sides more time to solve one of the biggest Brexit problems; the Irish border.
However, while May might have left the latest summit feeling more positive, it wasn’t good news at home. Brexiteers and other MPs have vocalised their concerns. This move would cost the UK more, meaning it would need to pay more in budget contributions. It would also restrict the UK’s ability to create deals with other nations. There are two schools of thought; while Brexiteers detest further months of EU inclusion, Remainers have seen an extension as evidence that perhaps a deal is impossible.
Meanwhile, the UK Public Sector Net Borrowing number came in at 3.259b in September. August’s number had reached 4.75b and the forecast this month was similar at 4.6b. Public Finances came in at 15.846b, following the previous month’s revision of 3.12b.
Bank of England (BoE) Governor Mark Carney is scheduled to talk this afternoon. The central bank mogul’s comments have created dramatic movements in the past, so investors will be paying attention.
Eurozone Data Thin, Leaving Euro to Tread Water
There’s not much Eurozone data due out today, leaving the single currency more sensitive to other global developments. This morning, The Eurozone Current Account August stat came in at 24.0b following a negatively revised July figure of 19.0b. The Pound to Euro (GBP/EUR) exchange rate is trading at 1.1385, around 0.20% higher.
Turkish Lira Forecast to Fluctuate on Auto Production
In Turkey, the latest Auto Production stat will be revealed. The previous number came in at -34.0% in August. Another severe contraction may bode badly for the Turkish Lira exchange rate. The Pound to Turkish Lira exchange rate is currently trending at 7.3532, around 0.30% higher.
Update: The Turkish Auto Production figure came in at -1.0% in September. The Pound has rocketed by almost 0.50% against the currency this morning. The Turkish currency firmed by around 2.0% against the US Dollar (TRY/USD) earlier in the week, a two-month high. The move was attributed to optimism surrounding US and Turkish ties after the return of a US pastor.
US Data in Short Supply, Trade Tensions Take Centre Stage
It’s a quiet day for US domestic data today, with only the September Existing Home Sales figure, and weekly rig count stats due out. Two Federal Reserve representatives will also speak. Raphael Bostic will talk about the economic outlook, while Robert Kaplan will also speak. Trade tensions are a hot topic of today as well. Today’s Chinese growth data showed the impact trade war prospects are having on the economy. The Pound to US Dollar (GBP/USD) exchange rate is trading at 1.3035, around 0.15% higher.