British Pound Jumps on Brexit News

Market Reviews

The British pound is boosted by news that UK Prime Minister Theresa May is ready to make a new offer on Irish border on Brexit negotiation. It is reported, that Theresa May plans to make a new Brexit deal with the European Union, as the country sees a way to reach an agreement on the border issue.

UK Chancellor of the Exchequer Philip Hammond defended Prime Minister Theresa May’s Chequers plan and said “What Chequers does is offer an in-the-middle solution, down the center, taking the best from both models, and proposing a way forward which delivers on the mandate of the British people in the referendum but also protects British jobs and British businesses.”

The euro grew moderately against the US dollar after three days of decline. The single currency was supported by strong data on the Eurozone labor market. However, the growth of the EUR/USD pair was restrained by the data on manufacturing PMI, that did not justify the forecasts. Eurozone unemployment rate dropped to 8.1% in August, below expectation of 8.2%.

Eurozone PMI manufacturing fell to 53.2 in September, down from August’s 54.6. German PMI manufacturing was finalized at 25-month low at 53.7. Meanwhile, UK PMI manufacturing rose to 53.8 in September, up from 53.0 and matched expectations.

The Canadian dollar is trading as the strongest one, supported by the new trilateral trade deal between the US, Canada and Mexico. The new agreement is called United States-Mexico-Canada Agreement (USMCA), which has replaced the NAFTA.

According to the USMCA deal, Canada and Mexico will be exempted with quota of 2.6m messenger vehicles. Pickup trucks will be exempted entirely. Mexico will get auto parts quota of USD 108B while Canada gets USD 32.4B.

European stocks were trading higher today. DAX gained 0.70%, CAC increased by 0.34% and FTSE rose by 0.17%. Earlier today, Nikkei closed up 0.52% at 24245.76. Singapore Strait Times dropped by 0.05% to 3255.46. German 10 year yield rose 0.0284 to 0.501, Italian 10 year yield also rises 0.038 to 3.180.

Factory activity in the Asian countries remains pressured by the US-China trade war. The recent data showed, that Japan Tankan large manufacturing index fell to 19 in Q3, down from 21 and missed expectation of 22. Large non-manufacturing index dropped to 22, down from 24 and missed expectation of 22. Non-manufacturing outlook rose to 22, up from 21 and beat expectation of 20. Large all industry capex rose 13.4%, missed expectation of 14.2%. Japan PMI manufacturing was finalized at 52.5 in September.