Currency Market Analysis

Aug 23, 2019 | Currency Market Analysis

Global Themes

Pound jumps higher on new deal hops

The British pound had its best day in over three months last night as markets hoped for a new agreement on the troublesome “Irish backstop” that continues to plague Brexit negotiations.

UK Prime Minister Boris Johnson is in Europe meeting with key EU leaders including German Chancellor Angela Merkel.

Merkel said overnight there is room for a compromise before the 31 October Brexit deadline.

The Irish backstop, a measure to mange the UK and Ireland’s land border, post-Brexit, remains a sticking point for UK politicians.

Fed caution

In other markets, the focus turned to the first day of the Jackson Hole Symposium which saw key US Federal Reserve board members signalled that they are not in favour of further rate cuts.

Well-known hawks Patrick Harker and Esther George both signalled that a solid jobs markets and improving wage growth means the Fed doesn’t need to cut rate sin the near term. (Hawks typically favour keeping rates higher to contain inflation.)

US slowdown

Global markets were mostly lower despite a series of better manufacturing numbers with Europe stronger and Japan in line.

The US manufacturing, however, fell into contraction for the first time since the GFC.

The Jackson Hole Symposium continues tonight. US Federal Reserve chairman Jerome Powell is due to speak at 9.00pm.

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