Fake news strikes again

6 September, 2018

Paul Newfield

An unusual day on the markets yesterday and a perfect illustration of how volatile rates currently are and how an uplift cannot be taken for granted for a continuation, as there was a supposed breakthrough in Brexit talks. Word was received that an agreement by the German government to accept a less detailed agreement on uk-eu trade. This caused gbp-usd to gain around 1% and around 0.5% against the euro, which was nearly a whole cent. Unfortunately for the pound this news was soon after refuted by both uk and german governments who stated “nothing had changed”. This caused the rates to lose around three quarters of the gains made. Who is to blame for this rumour/leak is still as yet, unknown.

Other than this there were plenty of Markit services PMI releases from many European countries with most coming in below expectation, although the uk’s iteration came in positively. Euro retail sales also were poor and with today offering no ecostats from the UK or from Europe of any significance, the pound is left wide open for reaction from data releases from the usa, including, employment, jobs data, non-farm payrolls and Markit services PMI, with later details of manufacturing, factory orders and oil and gas stocks. There is also the risk of more news, fake or not, from any Brexit breakthroughs…keep in close contact with your account manager here at CI to keep your finger on the pulse in these critical times.