3 month high for buying Euros

Last week’s trading saw the biggest weekly gain against the Euro since November 2017. Most of these gains came from a suffering Euro as focus shifted to the Italian budget deficit, which has now been agreed and set at 2% rather than 2.4%. The end of the week, however, saw a welcome bit of positivity on Brexit developments with EU negotiators claiming that a deal was ‘very close’ with issues such as the Irish border ‘heading in the right direction’. This means that rates for buying Euros are now the best seen since June, a great opportunity for buyers who understandably may not want to risk the final outcome of the Brexit negotiations in the coming month or 2. With GBP/EUR having gained 3 cents in just 2 weeks and against the major trend, there is a high risk of rates correcting back down this week after already hitting key resistance levels on Friday afternoon.

Other than the improvements for Sterling on Friday, the USD was the other currency in focus with last months non-farm payrolls and unemployment data announced at lunchtime. As ever this data provided a volatile time after the release as markets digested the various details. Non-farm payrolls came in at a disappointing 134k, down from 270k last month, whilst the headline unemployment rate improved to 2.8% for 2.9%. Eventually, it was Dollar weakness that prevailed as GBP/USD rose over half a cent throughout the afternoon.

Today is Columbus day in the USA meaning we can expect thinner trading over the next 24hrs. The rest of the week is also relatively quiet for data with UK figures out on Wednesday for GDP as well as Manufacturing & Industrial Production, and US Inflation figures due out Thursday afternoon. UK markets will now build towards the EU summit on 18th October for the next update of substance on Brexit, with plenty of risks still ahead, so don’t be surprised if Sterling rates slip off and stabilise after the recent good run.