Sterling Price and Talking Points
- US trade tariffs continue to reverberate around the market.
- UK PM May’s Brexit hopes take an EU knock-back.
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GBPUSD Buffeted on Both Sides
The prospect of a global trade war and ongoing Brexit concerns are the two main drivers of GBPUSD this week until the monthly US NFP numbers are released on Friday. However four US Fed speakers are out on the wires Wednesday so traders need to pay attention.
US President Trump’s decision to impose tariffs on steel and aluminium products last week sent a shiver through the US dollar, which gave back a lot of its recent gains. After having touched a multi-week high last Thursday the US dollar faded on commentary by POTUS with traders now looking ahead to Friday’s US non-farm payrolls numbers. Ahead of the monthly release, four Fed officials will opine tomorrow with traders looking for any hints on US monetary policy.
Last Friday UK PM Theresa May outlined her vision for the UK post-Brexit to a mildly positive market reaction with EU Brexit negotiator Michel Barnier ‘welcoming’ the clarity of May’s speech. Sterling rose in late-Monday trade after the UK PM told Parliament that “We are close to an agreement on the terms of a time-limited implementation period to give governments, businesses and citizens on both sides time to prepare for our new relationship.”
However commentary by EU Brexit adviser Stefaan de Rynck at an LSE lecture Monday seemes to have poured cold water on PM May’s hopes for securing a free-trade deal. De Rynck said that the rules of the single market were not compatible with May’s suggestion of mutual recognition of standards.
“The EU has moved away in the wake of the financial crisis from mutual recognition of national standards to a centralised approach with a single EU rule book and common enforcement structures and single supervisory structures.”
GBPUSD Three Hour Price Chart (February 12 – March 6, 2018)
What’s your opinion on GBPUSD – Still being driven by Brexit?Share your thoughts with us using the comments section at the end of the article or you can contact the author via email at nicholas.cawley@ig.com or via Twitter @nickcawley1.
--- Written by Nick Cawley, Analyst
