Barnier Gives Glimmer Of Hope For Deal
30 August, 2018
Sterling jumped yesterday afternoon as the US posted new homes sales figures, which came out lower than expected. This was nothing to do with the data of course, but actually as reports filtered out from the Chief EU Negotiator Michel Barnier that “the EU is ready to offer the UK a deal like no other” in stark contrast to earlier reports that negotiations were going badly and would unlikely find a solution by the 18th October deadline, they’d hoped for. As well as the comments on a deal, the EU also dropped the October deadline (pushing towards November instead), giving more time for talks to happen and a deal to be agreed.
Sterling spiked across the board, gaining a euro cent, 1.5 US cents and 2 cents against the AU and NZ dollars. This was a nice sight for anyone with pounds looking to buy foreign currency having been at near year lows earlier in the day’s trade. Many took advantage of the spike for their upcoming purchase either on a Spot trade or for future use in the form of a Forward contract. This is a great tool for such occasions to ensure you don’t miss out, despite not having all or wanting to part with all you sterling upfront. You can lock in the full amount of currency you need to buy with just 10 percent of the total sterling cost and can lock the rate in for settlement anything up to 2 years away. Excellent for businesses with overseas expenditure that want to know future costings for budgets or for individuals waiting for the bulk of their funds for that upcoming overseas property completion.
The US dollar weakness was also helped by the Mexican/US trade deal, giving investors more optimism surrounding the recent trade war talks, which had lent sentiment towards the more risk-averse side, which always helps dollar strength. Even despite to strong US GDP figure which grew to 4.2 percent, from an expected 4 percent couldn’t help curb sterling’s rally and saw EUR/USD also gain back half a cent against the greenback.
Today we have UK mortgage approvals and money supply figures ahead of German and US inflation figures plus Canadian GDP at 1.30pm, worth noting for any Loonie buyers out there. For some friendly guidance on how these releases may or may not affect your upcoming transfer or to speak about locking in your trade on a forward contract, speak to one of the team today.
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