British traders are off to a late start this week as U.K. banks are closed for the holiday on Monday. Any main events to prep for in the days ahead?
The U.K. economic calendar is empty when it comes to top-tier releases this week, but that doesn’t mean the coast is clear in terms of potential catalysts.
In fact, pound pairs might be in for surprise moves as major headlines typically generate stronger than usual reactions in these cases. Watch out for any reports related to Brexit negotiations, and do keep in mind that last week’s mood was a less gloomy one.
This suggests that any developments that support a more collaborative vibe in ongoing Brexit talks might keep propping up the British currency while any signs of discord could spur declines.
Last Week’s Price Review
After five consecutive weeks of net losses, the pound is finally on the winning side since its currently the third strongest currency of the week (as of 2 pm GMT).
The pound had a steady start, but buying pressure was noticeable early, possibly because pound bears were covering their shorts after last week’s pound-bashing and ahead of Brexit talks.
And when Brexit talks finally resumed, the pound popped higher across the board, likely because of speculation that talks would deliver some much-needed progress.
When talks for the day were finally done and U.K. Brexit Secretary Dominic Raab and E.U. Chief Brexit Negotiator Michel Barnier held their presser, the pound got slapped likely because Barnier said that the two parties are working hard to avoid a “no deal” Brexit, but that they are prepared for it.
Other than that, however, the overall message of the presser was actually positive since Barnier implied that progress was made when he said that:
“The negotiations are now entering the final stage … We have agreed that the EU and the UK will negotiate continuously from now on.”
For his part, Raab said that:
“We need to step up the intensity of the negotiations as we enter the final phase and we have agreed to meet regularly to resolve those outstanding issues.”
And as icing on the cake, Raab also said that:
“If we have that ambition, that pragmatism and that energy on both sides, I’m confident we can reach that agreement by October.”
Given all that, pound bulls got their second wind and began to charge higher. They did have a harder time against the Kiwi, the euro, and the Swissy, however.
After that, the pound traded roughly sideways on Wednesday before becoming more mixed on Thursday and Friday.
The pound did toss and turn on Thursday, though. And as noted in Thursday’s London session recap, the pound caught a bid when Raab said some rather positive-sounding things about the state of Brexit negotiations.
However, Raab also introduced the first set of technical notes on How to prepare if the UK leaves the EU with no deal. And market players apparently didn’t like that since the pound quickly turned lower after the initial jump.
Incidentally, the selling pressure on the pound after the technical notes were released ensured that the pound will lose out to the euro and the Swissy. The pound managed to cling to its gains against the rest of its peers, though, so the pound can finally enjoy being part of the winning circle.