The started last week poorly, following the negative Brexit headlines over the weekend, namely Barnier’s reaction to the Chequers proposal. The quid was sold off further following the release of a weaker than expected UK Manufacturing PMI print on Monday, which came in at 52.8 vs. 53.9. In fact, it was the weakest print for 25 months.
On the flip side of the coin a better than expected UK Services PMI print gave the pound a bit of a lift, but so too did a mild about-turn in risk sentiment. The biggest market-moving news of the week, at least as far as GBP was concerned, came from a Bloomberg news release that reported Britain and Germany were willing to drop key Brexit demands. Specifically, the report said “the British and German governments have abandoned key Brexit demands, potentially easing the path for the EU and UK to strike a deal”. GBP/USD gapped 100 points higher, back through 1.29 on the news.
What goes up……well, it didn’t last long. Within a couple of hours a German government spokesman said that their position on Brexit had in fact, not changed. The net impact on the pound was still positive however, and GBP/USD finished the week hovering where it started.