The pound shed some of its early gains on Monday. The catalyst for the volatility in the currency is in the headlines with the Brexit negotiations continuing to have a profound effect on the currency.
Sterling then surpassed last week’s high later in the morning, hitting 1.3132. Initially, the optimism for the EU offering a strong free-trade agreement kept the pound well supported. However, the luster for the offer was quickly unwound as the greenback strengthened and comments from PM May’s spokesman dampened the likelihood of a deal. Further diminishing market hopes was a report that UK Brexit Secretary Raab won’t be heading to Brussels this week ahead of the October EU summit next week. Instead, he is due to appear in the Commons today and which point he’ll deliver an update on Brexit negotiations. The feeling now is that a proposal and agreement on the Irish border/backstop is a little way off, which is undermining the pound right now. Overall, Brexit remains at a critical juncture with far-reaching impacts on financial markets.
Today was another quiet day on the economic calendar front for the UK with little to drive momentum. Attention remains affixed to the on-going Brexit negotiations for direction.