Pound Paring Gains
The Pound got a huge boost from Michel Barnier’s statement, indicating a potential Brexit advance, as well as from positive unemployment and job growth data, but now the momentum is weakening. Jobless rate in Britain closed at 4.0%, marking a 43-year minimum. Wage inflation pointed at improvement, with average earnings, excluding bonuses, lifting by an annual 2.9% in the 3 months to July, up from 2.7%.
EU chief negotiator Michel Barnier stated: “if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within 6 or 8 weeks.” And, “taking into account the time necessary for the ratification process, the House of Commons on one side, the European Parliament and the Council on the other side … we must reach an agreement before the beginning of November. I think it is possible.” The European Union will arrange a special summit for Brexit in November.
Meanwhile, the single currency has weakened, regardless positive ZEW economic sentiment. Plus, investors remain concerned over the trade spat with the United States.