Good morning,
Shortly after close of trading in the UK yesterday, Jean-Claude Junker gave a frank interview on his previous meeting with Boris Johnson and the next steps in the process before the EU Council meeting on the 17th of October.
In a move that surprised almost everyone, reporter included, Junker confessed he “did not have an emotional relationship to the backstop.” He then further added that he was more than happy to consider the UK Government’s alternative arrangements that have now been delivered.
Needless to say, GBP rose from -0.55% for the day after poor retail sales figures were released and roared past +1.1% to 1.1352 on the EUR and +1.22% to 1.2552 on the dollar.
If these warm words from the EU can translate into a united front between Europe and the UK at the summit in October, and the proposals are deemed acceptable by Parliament, this could well be seen as the start of sterlin’s mid-term recovery. Of course, with anything in politics, there is still a lot that could go wrong to derail the overnight euphoria.
Across the Atlantic, another development surfaced which put a brief dent into the dollar’s sustained demolition of the euro; with Trump’s trade spokesman announcing that the tariffs on China so far were “low level” and he was happy to escalate.
If neer $500bn equates to a low level, the mind boggles at what could be on the horizon – but Trump will still have to go through a re-election campaign before additional tariffs could bite.
Today is a data silent day as far as economic releases go, meaning much of the market activity will centre on further exploration of last night’s comments and traders wishing to take advantage of that gain before the weekend. Remember, if they can – you can too!
Have a great day.