Sterling soars as Brexit deal is now possible

• Sterling surges on Brexit breakthrough
• US consumer confidence forecast to be weaker

Having slipped in early trade, the Pound staged a significant recovery later on Thursday after the UK Prime Minister had lengthy discussions with the Irish PM Leo Varadkar. After the meeting, Varadkar confirmed that he firmly believes Boris Johnson wants a deal on Brexit and that they had made good progress on the tetchy subject of the Irish border. You would have thought that, if the Irish are happy with an outcome on this subject, the rest of the EU should have no reason to worry…probably.

Sterling surges on Brexit breakthrough

The Pound gained more than two cents against the USD and roughly the same against the Euro, having steadily fallen against both currencies for the last three weeks. It was a very good example of the pent-up demand for Sterling and the markets clear view that a Brexit deal is good for the UK. A data vacuum in the UK diary today means further news on Brexit is likely to be the only Sterling driver right now. Without further stimulus, the Pound is likely to slip through the day.

This morning’s diary is covered by EU inflation figures and a slight improvement is the general consensus for Germany, Spain and France. We have an EU finance ministers meeting today and a speech from the Vice-President of the European Central Bank Luis De Guindos. He doesn’t make a lot of headline speeches but he is known to signal policy changes from time to time.

US consumer confidence forecast to be weaker

The afternoon brings US import and export trade data along with consumer sentiment indices. A weaken of consumer sentiment is expected; further signs that the Federal Reserve may need to ease monetary policy, in spite of the Fed Governors resistance to doing what the President wants. There will be a couple of speeches from regional Fed Chairs, so maybe some hints will be forthcoming. There is also a chance of an OPEC meeting. With Turkey attacking Syria, tensions in the Middle East are riding very high, so that could be an interesting meeting. As oil is traded in Dollars, the outcome could well affect the value of the USD.

Canadian data today

Canada releases September employment data today. We expect the unemployment rate to remain low at 5.7% but the pace of new jobs to have slowed. That is probably enough to weaken the CAD a little.

Rugby world cup games cancelled

And Typhoon Hagibis must have known there was a lot of sport going on in Japan this weekend. Rugby World Cup games have been cancelled and qualifying for the Japanese Grand Prix has been moved to Sunday, the day of the race. I am sure it won’t distract a certain Mr Hamilton.