The pound was sent soaring to a 7 month high against the single currency yesterday afternoon after news a draft Brexit agreement was in place, unlocking the door to a deal being signed off with Europe by the end of the month. Removing the likelihood of “no deal” being an outcome, the pound rallied sharply achieving 1.1548 against the euro and cable reached 1.3033.
This morning has seen the pound retreating back, dipping below the 1.15 mark after reports Prime Minister May faces a potential mutiny from her own party and the DUP alike. The warnings come as it has been suggested the deal will fail to move through parliament in its current form. May will be addressing her cabinet at 2.00 GMT today to discuss the compromise on Brexit terms, the investors will be listening closely for any update.
Meanwhile CPI and RPI data for the UK has been released at 2.4% and 3.3% respectively, mirroring last months figures but falling short of the 2.5% & 3.4% forecast. The result has weakened sterling slightly, however the ongoing Brexit headlines will likely cause further volatility. Inflation data for the US will be released at 2.30 GMT today, forecast to show CPI increased by 0.2% and core CPI by 0.1%. Investors will be paying attention as the higher inflation gets the more likely the FED will be to increase interest rates in December.