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GBP Rebounds on Brexit Optimism as Theresa May and Angela Merkel Comment

20 October 2017 by News Desk

The pound advanced against the euro (GBP/EUR) and Australian Dollar (GBP/AUD) on Friday as Theresa May and EU leaders seemed to get a step closer to trade talks. By the afternoon, sterling was up by around 0.77% versus the single currency as markets became more optimistic about future Brexit progress.

Chief Executive of the manufacturers’ trade body EEF Terry Scuoler commented: ‘The warmer words emerging from the European Council following the approach adopted by the Prime Minister suggest there is a glimmer of light at the end of this tunnel. Business needs to see more than a hint of progress, however, because serious planning for transitional arrangements should be taking place now if companies are to firm up their business plans and pin down investment. Firms in the UK and across Europe are united in seeking clarity on a transition deal that maintains a level playing field in order to avoid confusion and potential economic damage.’

In addition, German Chancellor Angela Merkel also stated that progress was being made, saying: ‘My impression is that these talks are moving forward step by step. From my side there are no indications at all that we won’t succeed.’

This positive Brexit news came after a host of negative data this week, which showed the UK hadn’t performed as well as expected. On Thursday, the Office for National Statistics (ONS) produced retail sales figures which showed sales contracted sharply by -0.8% in September after economists had forecast a much smaller fall.

Inflation also jumped to 3.0% amid a backdrop of falling real wages. In the three months through August, UK earnings rose by a meagre 2.2%, unchanged from the previous three months.

The pound to euro (GBP/EUR) exchange rate is currently trading at 1.1184

The pound to Australian dollar (GBP/AUD) exchange rate is trending around 1.6865.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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