At the risk of sounding like a broken record Sterling has had another turbulent 24 hours and is currently, on a number of parameters, one of the most volatile major currencies in the world.
The GBP/USD cross was stable overnight around 1.275 but had a double dip-and-rebound before and after the release of largely uneventful CPI-inflation data for September (headline unchanged at 1.7% yoy, core up to 1.7% yoy from 1.5% yoy, broadly in line with expectations). Sterling remained jittery as reports came in that while the UK and EU had made progress on Brexit negotiations, the EU was unlikely to have sufficient time to assess Boris Johnson’s proposals and make a formal announcement at its European Council summit which ends on Friday.
The EU is due to give a preliminary assessment of negotiations by the end of today but markets are seemingly of the view that the outcome will be broadly positive. GBP/USD has since lunchtime surged to 1.286 – levels last seen in mid-May. Modest Dollar weakness, following the release of weak US retail sales data for September, has admittedly contributed to the up-move in GBP/USD, but GBP/EUR has also edged higher to 1.16.
