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Sterling Mixed on Hopes for Brexit Deal, Rising Manufacturing PMI

December 1, 2020 at 17:21 by Vladimir Vyun

A column of 50 British pound notesThe Great Britain pound was mixed today, rising against some rivals but falling versus others, despite positive fundamentals. Hopes for the Brexit deal and a better-than-expected manufacturing report were providing support to the currency of the United Kingdom.

Markets remained hopeful that the UK and the European Union will be able to reach a trade deal before the year’s end. Indeed, Irish Prime Minister Micheal Martin said that he thinks that the deal can be achieved as soon as this week:

 

 

It will require political will to conclude the deal and there are options to conclude the deal, and so on balance, I would be hopeful that it can be done at the end of this week

Senior British minister Michael Gove said that the no-deal scenario remains a possibility but he hopes that the compromise could be reached:

I think it’s certainly the case that there is a chance that we may not get a negotiated outcome, that’s why it’s important business prepares for all eventualities, but I very much want a deal and I believe that we can secure one.

The seasonally adjusted IHS Markit/CIPS Manufacturing Purchasing Managers’ Index rose to a multi-year high of 55.6 in November, up from 53.7 in October. The PMI was above the 50.0 level, showing expansion, for six consecutive months. The report commented on the result:

The upturn in the UK manufacturing economy strengthened during November, as rates of growth in output and new business accelerated and the downturn in employment slowed. The upcoming end to the Brexit transition period meanwhile led to rising levels of input purchasing, stockpiling of raw materials and stronger gains in new export business as EU-based clients brought forward orders.

GBP/USD rose from 1.3320 to 1.3401 as of 17:20 GMT today. EUR/GBP gained from 0.9007 to 0.8986. GBP/NZD was about flat at 1.8981.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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