Sterling hit’s multi-month highs – 30th November 2017
Sterling hit’s multi-month highs – 30th November 2017
Sterling continued to trade higher yesterday and is now trading comfortably above its closing rate on November 2nd, the day it fell following the comments made by the Bank of England in the wake of the interest rate hike. Yesterday it reached £/€ 1.1339 versus the Euro and has continued to rally overnight, trading as high as £/€ 1.1361. The next target for Sterling will be the November 2nd high of £/€ 1.1407.
It wasn’t just the Euro that Sterling has made gains against; it is trading at the highest level against the Australian and New Zealand Dollar since the UK voted for Brexit in June ’16 while against the US Dollar it is at a two-month high as it has benefited from the uncertainty over next month’s proposed rate hike by the US FOMC.
It would be strange to write an update and not mention Brexit so here is the Brexit latest; despite Prime Minister Theresa May denying that a financial agreement has been reached with the EU, traders are willing to accept that the offer of up to €50bn supposedly made to Brussels is going to be sufficient to unlock stage two of Brexit negotiations. It will be a telling statement of intent if the EU is prepared to accept that there has been sufficient progress over the other two outstanding issues(namely the Irish border and treatment of EU nationals remaining in the UK post-Brexit) and allow talks over the future relationship between the UK and EU to begin.
Interestingly, the recent progress over Brexit talks has come exclusively from Brussels which demonstrates perfectly the bureaucratic mess the EU finds itself in. Jean-Claude Juncker the President of the European Commission has intimated that talks are progressing well and that they have intensified over recent weeks while Donald Tusk President of the European Council has said that more work is needed, and proposals need to be delivered by December 4th. The Chief Negotiator Michel Barnier has been strangely silent presumably getting on with the job at hand. As we enter the final month of the year, the inference is that talks have reached a crucial point.
The US Dollar was unmoved yesterday by data that showed that the US economy grew by 3.3% in the three months to September. This was a stronger than expected revision but the lack of movement in the US Dollar illustrates perfectly the concerns of the FOMC over the lack of inflation in the economy despite above trend growth. Perhaps inflation-free growth will be a new phenomenon as the global economy emerges from the financial crisis of the past ten years…?