Britain needs to have a deal in place so that it can effectively and profitably trade with the EU which would otherwise have to impose various tariffs and quotas in keeping with WTO rules.
The Pound Sterling struck a 1-week peak versus the US Dollar during London trade on Wednesday on news that a trade deal seemed within reach. Michel Barnier, one of the negotiators for the Brexit trade agreement, said that a deal seemed within reach provided both sides were willing to work with compromises toward a resolution on the various sticking points. That gave market traders hope that the deal would be reached before the deadline, now set for this month's end. Britain needs to have a deal in place so that it can effectively and profitably trade with the EU which would otherwise have to impose various tariffs and quotas in keeping with WTO rules.
As of 11:32 am in London, the GBP/USD was trading higher at $1.3049, a gain of 0.8525%, and sliding from the session peak of $1.30656. The EUR/GBP was lower at 0.9078 Pence, down 0.5727%; the pair has ranged from 0.90660 Pence to 0.91451 Pence in today's session. The GBP/JPY was up at 136.8500 Yen, a gain of 0.2579%.
UK Data Largely Disappoints
Sentiment related to the revived hopes of a Brexit deal is clearly helping Sterling says currency strategists, which is good news, especially given the latest data from the UK. The Office of National Statistics reported earlier that public net sector borrowing was higher than expected at £35.367 billion, while retail prices and consumer inflation also missed their respective forecasts. On a year-over-year basis, CPI came in at 0.5%, as anticipated; however, on a month-over-month basis, CPI came in at 0.4%, less than the 0.5% expected. Also, a factor on sentiment is what appears to be a second wave of Covid-19 cases in the UK; a deputy from the UK's medical office expects to see a pick up of infections as well as deaths related to the Coronavirus.