British Pound Makes Gains on Brexit News Ahead of US Non Farm Payrolls
Yesterday the British Pound made gains across the board as word surfaced that progress towards an agreement on Brexit is being made. Instantly the Pound surged against all other currencies. The main gains were made against the US Dollar with weaker than forecast trade balance data arriving on US markets opening.
While a final deal with the EU for Brexit terms has yet to be reached, the news yesterday said that Germany had agreed to settle for a less detailed plan for the UK’s trade with the EU.
Worries over whether the UK will leave the EU with a deal, or no deal, have been hampering any gains that GBP can make. As always, uncertainty makes traders worry and money is scared to be put into the UK’s currency without a clearer long term picture on where the economy might be in a few years’ time.
Whilst GBP has faltered versus the Euro and Swiss Franc in recent times, it still holds relatively high versus Oceania currencies, mainly the Australian Dollar and New Zealand Dollar. Both of these currencies remain weak and are stumbling around their 5 year lows.
This week is Non Farm Payroll data week in the USA. Traders are expecting a forecast rise in Non Farm employment, but the forecast for the actual Unemployment rate is forecast to fall by a small 0.1%.
The US Dollar has remained relatively static this week, which is often the case before Non Farm Payroll data, with traders unwilling to commit funds ahead of what is a volatile trading session on Friday.
Gains for the Dollar were held back in part by a stronger British Pound, but as is normal we expect that to change on Friday when money pours into (or out of) the Dollar after the much anticipated data on Friday.
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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