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Sterling looks at the Brexit report on financial services sealed

SINGAPORE (Reuters) – The British pound jumped on Thursday on a report that Prime Minister Theresa May has reached an…

SINGAPORE (Reuters) – The British pound jumped on Thursday on a report that Prime Minister Theresa May has reached an agreement with Brussels that would provide UK financial services companies with continued access to European markets after Brexit.

PHILPHOTO: British Pound sterling banknotes are viewed at Money Service Austria’s headquarters in Vienna, Austria, November 1

6, 2017. REUTERS / Leonhard Foeger / Filfoto

Sterling was strengthened up to 0.6 percent against the dollar in Asian trading hours, according to the report from Times.

British and European negotiators have reached a preliminary agreement on all aspects of a future partnership on services, as well as the exchange of data, reported the British newspaper, referring to government sources.

“It’s still hard to make a direct call on the pound, as both optimistic and pessimistic headlines keep floating around. But I expect a last minute deal to be clarified before the EU summit in December” says Sim Moh Siong, currency director at Bank of Singapore.

The pound was last traded to $ 1,2849, up 0.62 percent of the day. It has lost 3 percent against the dollar over the past three weeks, as markets were worried about whether Britain would ensure an orderly exit from the European Union.

The sterling also watched winnings of more than 0.5 percent each against the yen and the Swiss franc. The euro lost 0.4 percent compared to the pound to trade at 0.8828 on Thursday.

Traders also looked at the Bank of England (BoE) monetary policy decisions later this day.

Economists demanded by Reuters expect the nine members of the BoE Monetary Policy Committee to vote unanimously to keep interest rates this month and on average we do not see an additional interest rate until May.

“Britain is still not closer to an agreement. They are beyond the critical period of negotiations, which means that BoE Governor Mark Carney will be even more concerned about the negative risks,” said Kathy Lien of BK Asset Management.

“As a result, traders can not count on the central bank to save the pound because they have clarified that the prospects for the UK economy are linked to the Brexit negotiations.”

Sterling will increase about 5.5 percent against dollars if Britain and the European Union agree on a divorce agreement, found a Reuters vote but will fall more than 6 percent if no agreement is reached.

The euro picked $ 1,1341 and received 0.27 percent losing ground during the last three trading sessions, depressed by weak euro area information and Italian budget issues and Brexit woes.

The dollar index, a meter of its value compared to six major comrades, moved 0.3 percent to 96.91, leaving a 16 month high 97.2 hits in the previous session. The leg was due to the fact that sterling and euro move higher, which together account for about 70 percent of the index.

The greenbacks had risen overnight after the National Employment Report for ADP showed that private sector wages in the US increased most with eight months in October, confirming that the economy continues to grow at a relatively robust pace.

Increasing expectations of continued interest rate hikes by the Federal Reserve, with a 25-step increase seen in December and possibly another two years in 2019.

The yen was touching the dollar at 112.85. The Japanese currency weakened to a three week low of 113.38 on Wednesday after BOJ announced its intention to maintain its extremely resolved monetary policy for some time.

Although monetary divergence between Fed and BOJ gives the dollar over the yen in the medium term, some analysts believe that the yen can actually be strengthened in the coming months.

“This year, the yen’s function as a sheltered currency is diluted by the higher return offered from the dollar,” said Jane Foley, currency manager at Rabobank in a listing.

“The risk of a deterioration of the US-China trade war which slows global growth and the slowdown in US growth and a flat rate of Fed prices suggest that the yen could win some land against the dollar next year . “

Rabobank is looking for a move to 110 around the middle of next year.

The Australian dollar moved higher by 0.58 percent to $ 0.7115 on better than expected trading information.

Reporting of Vatsal Srivastava; Editing Shri Navaratnam

Our Standards: Thomson Reuters Trust Principles.

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