Market optimism is being spurred on by continued hopes for a Brexit deal, European Markit surveys and PMI readings.
Market optimism for a Brexit deal in its last month of negotiations has helped to push the GBP/USD across the $1.34 level for the first time this quarter. Alhough analysts caution that there has not been any tangible progress, comments made by the Irish Prime Minister helped improve sentiment. The three issues still needing to be addressed include governance rules, fishing and dispute resolution; one member of the British government said that both sides are still far from an agreement because the EU demands are too onerous. Currency strategists expect to see a lot of volatility in the GBP/USD and the EUR/GBP pairs as the negotiations continue, though for the most part, they believe markets have already priced in the uncertainty.
In London trading as of 11:02 am, the GBP/USD was trading higher at $1.3352, a gain of 0.168% and sliding away from the session peak of $1.34086. The EUR/GBP was higher at 0.8963 pence, up 0.1341%; the pair has ranged from a low of 0.89278 pence to a high of 0.89784 pence.
Markit Surveys Show Mixed Outcomes
Data from the UK and EU released earlier today also helped to improve market sentiment. Notably, in the UK, Markit reported that the November PMI reading for the UK's manufacturing sector was unexpectedly higher at 55.6, against a forecast of 55.2. In the EU, the same survey showed the EU's manufacturing sector reading at 53.8, against a predicted 53.6 reading. Across the EU, the various PMIs were mixed, with Germany, Spain and Italy coming below expectations at 57.8, 49.8, and 51.5, respectively, and France exceeding analysts' forecasts with a reading of 49.6. Later today, the US survey of the sector will be released, with analysts predicting a decline to 58.