Good morning,

The pound has seen its biggest move up in seven months, as comments around Johnson and Varadkar’s discussions are deemed positive and a “pathway” is in sight towards a Brexit deal.

From 15:00 yesterday as the news came out, the pound has driven up about 2% on the USD and just under against the Euro.

We can see from trader positions in derivatives on the pound that investors are the most bullish they have been on the pound since 2003 according to data collected from Bloomberg.

The next few days will be pivotal in deciding what outcome we see, with an extension and subsequent snap election still very much a prominent scenario. By no means does this spike represent a promise for continued GBP strength, but it certainly does present opportunities to buy the EUR close to the 1.13 region and the USD above 1.24.

Although eyes are fixated on parliament, there are some data readings today to take note of, with German inflation this morning landing within expectations and US consumer sentiment data due this afternoon at 15:00.

Things continue to look optimistic for the US/China discussions, with Trump’s statements supporting the positive sentiment.  An interim deal remains likely and markets will continue to buy into the positivity in the absence of any shock announcements here.

The key takeaway today is if you remain exposed in the pound, it has become clear that the currency is extremely reactive to the smallest bit of news. Target pricing with firm orders provides a real opportunity to take advantage of the volatility and to support your trade requirements in this unique trading market around Brexit.

Have a great day.

Author: Ross Hammond, Senior Corporate Account Manager