GBP/USD pushed higher through the day on Friday as markets got more used to the idea of a Brexit deal being struck. Whilst Brexit was on everyone’s mind, markets were also keenly anticipating the release of US Non-Farm Payrolls that Friday afternoon. The data disappointed and sent the dollar lower vs. the pound, and when combined with the positive Brexit story, GBP/USD pushed even higher.
Of course, the Brexit story developed over the weekend with Bloomberg reporting that the EU was about to offer the UK a free trade deal, albeit they are set to reject PM May’s demands for “frictionless trade”. On a related note, Japan’s PM Abe said they would welcome Britain with open arms into the Trans Pacific trade pact.
But, despite all the Brexit positivity, GBP/USD has fallen back overnight and early this morning, and hangs on to support at 1.30 currently. Perhaps there’s a bit of caution out there as UK/EUR negotiations look set to intensify over the next couple of weeks, and it’s these headlines that will likely be the principal driver of the pound in the short, medium and long term. There isn’t a lot due this week in terms of data with Wednesday being the most important day for it with both GDP and Manufacturing Production due.