Sterling jumps on Brexit optimism, Jackson Hole Symposium in focus…
The pound spiked higher yesterday as traders begin to muster a smidgen of optimism that a deal may be forged before the 31st October. More comments from Angela Merkel and a respectable meeting between PM Johnson and French President Macron helped the pound push higher against its peers. Merkel stated that she would like to assist Johnson in finding a solution to the Irish backstop. Sterling leapt higher against its major counterparts, trading above $1.22 and €1.10 against the US dollar and euro, respectively. Next up for the Prime Minister – this weekend’s G7 meeting as well as Sunday breakfast with Donald Trump.
Today sees full focus on the Jackson Hole Symposium in Wyoming. All eyes will be on Federal Reserve Chair Powell’s speech at 3pm. The market is urging to find out whether there will indeed be more interest rate cuts in 2019 or if it’s just wishful thinking. Currently, Fed speakers have been giving the market somewhat mixed messages, with certain members of the FOMC calling for no further reductions in interest rates while some are pushing for another 50bps by year-end. Maybe yesterday’s poor US manufacturing PMI releases, which showed a contractionary reading for the first time in a decade, will help members appreciate the fragility of the current global industrial sector.
Enjoy the weekend.
Written by Viv Savani. 8:44am, August 23rd 2019
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