The Sterling sell-off eases
So the Pound has shown some fight mid-week with nearly 1% clawed back across the board. Brexit is obviously dominating the market just now and it looks as if there has been some headway made on the matter of food exports.
Supposedly, the EU has asked the UK to provide details of its post-Brexit animal and plant health rules by the end of October and the UK are due to confirm they will remain the same as now. This is good news, as EU farmers need to know the conditions to be able to export goods to the UK from next year and it means another trade box can be ticked off the list.
There is talk that after the Pound suffered it's worst trading week since mid-March last week, a correction is underway. We are in the view that last week was itself a correction, as the Pound was inflated during August's free-shot month. The market remains cautiously optimistic for a Brexit deal and as long as the two sides keep talking, this is the likely outcome.
Later today we see the Fed set out its new approach to inflation. The meeting tonight will undoubtedly cause volatility and may see £-$ rates continue its recent fightback. Tomorrow, the MPC meeting will either contribute to the Pounds revival or hinder it. Inflation figures released today showed deflation in July & August, meaning prices on goods are unchanged from where they were last year. We will learn more tomorrow on what the BoE think of the recent inflation figures and what measures may need to come into play near-term.