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Pound pops on Brexit party promise

GBP - British Pound

It was a pound positive day yesterday as Nigel Farage's Brexit party said it would not stand in the 317 seats won by the Conservatives in the 2017 election in an effort to get Brexit done asap. Farage appears to see Boris Johnson's withdrawal agreement as the most likely way to extract the UK from the EU despite his many reservations over some of its finer points. The Brexit Party will instead focus its attention on taking on Labour and Lib Dem held seats, hoping to primarily to win over Labour/leave supporters in an effort to avoid his perceived nightmare scenario of a hung parliament and more Brexit delay.

GBP/USD popped around 70 points as Farage's news hit the wires nearly cracking 1.29 before retracing back slowly as markets realised there is a still a long way to go until December 12th's vote. Bookmakers however have shortened the odds on a Conservative majority government from around evens to 4/7. All eyes will now be on polling before the vote with any improvement in the Tory position likely to strengthen the pound.

Data-wise yesterday saw a rebound in quarterly UK GDP with the preliminary print for Q3 rising to 0.3% after Q2's drop of -0.2%. Although avoiding a technical recession a rise of 0.4% had been eyed and the year on year rise of just 1% was the weakest in over ten years with the depressed figures blamed on ongoing Brexit uncertainty. GBP/USD is back down to around 1.2830 with GBP/EUR back to 1.1640 after falling short of 1.17. Today's big news from the UK is wage growth figures with 3m/y expected to hold at 3.8%

Key Movers

American, Canadian and French markets were closed yesterday as its people remembered the sacrifice of servicemen and women of wars gone by. Today sees a return to full trading with markets hoping for more positive news re: phase one of the the proposed US/China trade agreement. Recent positive comments from Chinese leader Xi Jinping about an agreement being close have bolstered risk assets although a lack of new developments over the weekend have seen some of these slip, with one of the classic proxy's on the matter AUD/USD dropping back below .69. USD/JPY continues to flit around the 109 handle with markets likely eyeing Donald Trump's lunchtime appearance at the New York Economic Club for new developments on the matter.

Tonight is a busy night for the antipodeans with Australia showing wage growth numbers and the Reserve Bank of New Zealand likely to cut rates down to 0.75% from 1% with its message of future moves likely to be the main driver for the kiwi.

From Europe its another quiet day with only the monthly German ZEW Economic Sentiment survey due. A rise from -22.8 to -13.2 is predicted so anything higher should bolster the shared currency. Germany's economy is crying out for a breakthrough in the US/China trade impasse with Thursday's GDP figures expecting it to show it has slipped into technical recession as its car manufacturers suffer from a reduction in orders from the Far East. EUR/USD sits at 1.1030

Expected Ranges

GBP/USD: 1.2790 - 1.29 ▼

GBP/EUR: 1.1595 - 1.1690 ▲

GBP/AUD: 1.8670 - 1.8820 ▲

GBP/NZD: 2.0130 - 2.0310 ▲

GBP/CAD: 1.6920 - 1.7050 ▲