This morning, the British pound remains positive after receiving a boost yesterday. Despite the usual negotiation noises from both sides, there appear to be genuine hopes as the EU appear to be offering the UK a two year transition deal. The GBP/USD ended higher, with the EUR/GBP slumping.
The dollar pairs generally had a good day yesterday and this morning as the US dollar index slips lower for two straight days.
While the pound made gains, the euro reversed, with the EUR/USD dropping around the speech from ECB President Draghi.
Elsewhere, the Aussie and New Zealand dollar have continued their winning runs.
The yen pairs have a negative bias, mainly driven by the weakening US dollar.
Today, we have US CPI and retail sales at 13.30.
At 15.00, we get US preliminary UoM consumer sentiment.
FOMC member Evans speaks at 15.25, with Kaplan speaking at 16.30.
Brexit appears to be the key driver for the pound at the moment and while this is likely to wax and wane, it’s clear that traders have hooked on to the positive potential of a transition deal.
Pessimism is built into the pound right now, so any positive surprises could force even more of an upside move on the GBP/USD.