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Pound US dollar exchange rate up: Barnier suggests Brexit deal ‘still possible this week’

Pound US dollar exchange rate up: Barnier suggests Brexit deal ‘still possible this week’ 1

GBP investors were quick to seize on the remarks, propelling GBP/USD to a new three-month high. However, the pairing failed to break through the $ 1.27 barrier, with some gains trimmed later in the afternoon when M Barnier warned that the final legal text must be agreed tonight if a deal is to be in place for this week’s EU summit.  M Barnier suggested there were three likely outcomes for talks: “A deal tonight; an extension; or a breakdown.” Meanwhile, a gloomy UK jobs report limited the upside potential of Sterling, with analysts warning that the British jobs market “shows signs of slowing” after unemployment rose and wage growth slowed in August. 

With all eyes fixed firmly on Brexit negotiations, GBP investors largely shrugged off the underwhelming data.  

At the same time, the US dollar struggled to find support today amidst fading US-China trade optimism.

While markets initially welcomed this week’s announcement for a “phase 1” trade deal by Donald Trump, optimism quickly turned to scepticism as a lack of details and reports suggesting Beijing wanted more talks before signing off on the deal undermined investor confidence.

Looking to the rest of the week, Brexit will continue to dominate GBP/USD exchange rate movement, especially as we approach an EU summit on Thursday.

However GBP investors are also likely to keep their eyes on Wednesday’s UK consumer price index which may lend some support to Sterling if we see inflation accelerate again in September.

On the other side of the pond, the publication of the US retail sales report may exert some pressure on the US dollar if sales growth slowed as suspected last month.

Daily Express :: City and Business Feed

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