Market Drivers November 29, 2017
- Cable extends gains
- USD/JPY hold gains ahead of Yellen and tax votes
- Nikkei 0.49% DAX 0.83%
- Oil $57/bbl
- Gold $1294/oz.
Europe and Asia GBP: UK Mortgage Approvals 64.5K vs. 65K EUR: Business Climate 114.6 vs. 114.6
North America USD: GDP 8:30 USD: Pending Homes 10:00 USD: Yellen Testimony 10:00
The pound continued its winning ways in Asian and early European trade today as markets continued to respond positively to news that UK and EU may be close to a deal on the Brexit porce bill.
Conciliatory rhetoric from Irish officials, who stated that they were not trying to scuttle the Brexit negotiations, also helped sentiment in the pair as it took out the 1.3400 barrier in morning London dealing. Still, Ireland remains the key barrier to negotiations and will likely be the primary topic of discussion between UK and EU next week.
Overall, however, the massive progress in negotiations took the market by surprise yesterday, as Brexit talk appeared to have been at an impasse just a week ago. The fact that parties are closer to an agreement suggests that the prospect of “hard Brexit” has diminished considerably and that is likely to provide a further boost to the pound. That would be especially true if the two parties came to some sort of an agreement on Ireland which would clear away the most contentious issues and pave the way to a more comprehensive settlement. Barring any negative news shocks from negotiations, the price action in cable should continue to be constructive and could push the pair towards the 1.3500 barrier as the day progresses.
In North America today the focus will be on US GDP figures as well Janet Yellen’s final testimony to Congress. On the GFP front the market is looking for a 3.2% print which would confirm that growth accelerated in Q3 of this year and if Ms. Yellen remains relatively sanguine in her assessment of economic conditions going forward, USD/JPY should respond positively and could push towards the 112.00 barrier as the day goes on.