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Pound reaches three-month high against Euro

While a deal looks closer in sight, market participants are watching closely the negative impact Brexit uncertainty is having on growth.

The Pound has rallied to 1.1395 its highest value in three months against the Euro. While its stellar performance is boosted by optimism that a Brexit deal will be reached, Sterling has never been so weak for such an extended period.

That said, uncertainty over a Brexit outcome is stunting the UK’s growth, which is evident in the housing market. For the second month in a row, home prices dipped by 1.4 per cent month on month in September as buyers take a “wait-and-see” approach, according to Halifax.

Meanwhile, growth of the US jobs market slowed in September, but the unemployment rate dropped to 3.7 per cent – a 49 year low, according to data released by the US Department of Labor. Despite the miss, the US economy continues to outperform its global peers. For some this is a positive outlook, but for the Federal Reserve (Fed) this is a sign that the economy may be overheating.

Finally, US President Donald Trump’s attempts to rebalance the US trade deficit might have hit a wall. The shortfall reached a six-month high of nearly $75.5 million in August as exports dropped further amid declining soybean shipments and imports hitting a record high. This is a clear sign that trade may impede economic growth in the third quarter.

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