pound-sterling-gbp-coin - GBP
  • UK PMIs in expansion territory, service sector slows.
  • Brexit optimism as talks resume.
  • GBP/USD presses against 1.3100

October UK PMIs revealed a steep slowdown in business activity compared to the previous months as the service sector contribution slowed dramatically. While all three PMI readings show the economy expanding, this was thanks in part to rising exports  as overseas customers sought to secure orders prior to any Brexit disruption. IHS Markit’s chief business economist Chris Williamson expects the UK economy to expand in Q4, but at a significantly slower rate.

Optimism is growing that the EU and UK can reach a post-Brexit trade deal in the coming weeks as both sides return to the negotiating table. Talks will intensify, continuing over the weekend and into next week and beyond. Both sides are suggesting that compromises could be coming to seal a deal/Separately, Oxford University’s vaccine trials are showing positive results. A report by the University of Bristol revealed that the vaccine ‘successfully produces a strong immune response’. The British government has already purchased 60 million doses of the Oxford University/AstraZeneca drug which could be available for the vulnerable by the end of the year.

GBP/USD pushed back above 1.3100 in early trade. However, it is now edging lower. Brexit continues to drive the pair, in addition to US stimulus talks which are adding volatility to the US dollar. So far, there is no new stimulus deal. Reports suggest one is coming but it may not be before the November 3 presidential election. Brexit trade talks and US stimulus discussions are serious fundamental drivers, so caution is warranted when trading GBP/USD.