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Thomson Reuters
Nov 06 - 02:36 PM
GBP/USD - COMMENT-Brexit Hopes Pull GBP/USD, BoE Expectations Higher
First appeared on eFXplus on Nov 06 - 11:05 AM

For sterling, Brexit sentiment is all about BoE expectations, which are on the rise. GBP/USD gains are outpacing other major currency pairs as heightened optimism for a deal has lifted cable to its highest level since October 19.
Markets appear to be taking an optimistic view of May's comment that 95 percent of the withdrawal agreement is complete as GBP/USD shorts unwind, rather than worrying that the five percent remaining could be irresolvable.
In sympathy with rising Brexit deal optimism, UK short-sterling futures are drifting lower, sending rates higher.
The overhang of Brexit uncertainty has kept the BoE from hiking rates due to concerns over the potential economic effects of UK crashing out of the EU without a deal.
As these fears diminish, UK-U.S.
rate spreads are narrowing, lifting British rates further out the short-sterling curve and adding to GBP/USD's updraft.
GBP/USD gains are finding resistance every 50 pips as Brexit deal skeptics use cable strength as an opportunity to sell.

GBP Chart: Click here

Source:
Thomson Reuters IFR Markets

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