As Brexit talks enter what can only be described as 'squeaky bum time', the resilience of the pound this week is an indication of its cautiously optimistic bias ahead of the pivotal Dec EU summit, according to Viraj Patel, Foreign Exchange Strategist at ING.
Key Quotes
“It's clear that UK officials are ramping up their efforts to break the impasse, albeit in their own unique way; David Davis yesterday said that talks should not put ‘politics over prosperity’, while also reigning back on his claim earlier in the week that odds of getting a deal are 50:50 – by stating that a No Deal seems ‘incredibly unlikely’. Theresa May is herself meeting with the EU Council President Donald Tusk today to make progress on Brexit divorce proceedings. The focus will also shift to the Chancellor’s Budget next week; while Philip Hammond's hands will be tied by weaker OBR growth forecasts – as well as higher inflation forecasts that may increase debt-servicing costs – any growth gimmicks may lend itself to a steeper UK rate curve. With GBP bulls retaining a ‘gotta have faith’ mantra in regards to Brexit talks, we could see the rally in GBP/USD extend beyond 1.3250-1.3300.”
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