The pound continued its positive run upwards yesterday, forcing its way above 1.32 for the first time since September 26th. Month-on-month GDP figures released yesterday morning remained flat and slightly below expectations. Despite this, Industrial and Manufacturing Production printed up 1.3% on the year. The pound traded briefly lower on the data, but ultimately it had little impact amid the increasing Brexit headlines.
Brexit again remained the key focus for traders. GBP/USD appreciated significantly after comments from the EU’s Chief Negotiator Barnier. Barnier indicated that a withdrawal deal was 80-85% done although they still need to agree on the Irish border issue. PM May’s chequers plan was also referenced, with the EU suggesting they found many points of convergence, which could see the UK remain temporarily in the EU’s customs regime. It has been reported that Raab may head to Brussels on Monday if a deal can be made to work. The GBP outperformed most of the major currencies on the back of Brexit optimism, rising roughly 0.5% on the day.
Brexit remains front and center. Carney is speaking this morning, and it will be difficult for him not to make mention of recent Brexit developments. US inflation numbers are then released this afternoon, so it may be another bumpy ride for GBP/USD today.