November kicked off with the focus shifting back onto the pound, with the currency rocketing higher after the latest Brexit update.
The Times reported that Theresa May has tentatively reached a deal with the EU that would allow UK financial services firms access to European markets post-divorce. This news easily overshadowed Dominic Raab’s quick climbdown over the proximity of a wider deal – the Brexit minister had suggested an agreement could be reached within 3 weeks, only to reverse that claim just 3 hours later – and helped put sterling back on the right path after a troublesome October.
Against the dollar it rose 1%, propelling cable to a $1.29-crossing 8 day peak, while against the euro it was up 0.6% and at a 10 day high of €1.135. This did mean, however, that the FTSE was forced to give back some of its Halloween rally. Sterling’s gains, combined with Brent Crude’s supply-fearing slide dragging BP (LON:BP) and Shell (LON:RDSa) – the latter of which managed to miss Q3 forecasts despite posting its highest profits for 4 years – lower, caused the UK to drop 0.6%, sending it back under 7100.
Yet neither the FTSE nor pound should get too comfortable, for there is a lot for the pair still to process. First up is October’s manufacturing PMI, set to slip from 53.8 to 53.0 month-on-month; if accurate, that could take some of the wind out of sterling’s sails. Then, at midday, there’s the latest Bank of England ‘Super Thursday’; and though rates are almost guaranteed to remain unchanged, the inflation report is going to be worth a gander.
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