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Pound rises on Brexit deal optimism

Sterling gets a boost while the UK economic growth forecast looks cloudy.

Brexit deal ends years of uncertainty, faces gruelling vote in Parliament

The Pound is up by more than 2 per cent this month.

The UK currency got a further boost to 1.1456 against the Euro yesterday, 9 October after Bloomberg reported UK and EU officials were in the process of negotiating a compromise Brexit deal in Brussels. Based on this “interim” agreement, Britain will remain temporarily within the European Union’s customs regime.

While this news offers some optimism, the future UK economic outlook is less bright.

Britain’s fiscal long-term position is second to last and marginally ahead Portugal, according to the International Monetary Fund’s (IMF) league table of the strength of public finances. The data showed that the UK had less than £3 trillion in assets and £5 trillion in public debts and future pension liabilities. With a shortfall of £2 trillion, the government will have to look into ways to bridge the gap by increasing tax or making cuts to its fiscal plan.

Meanwhile, Nimrata Haley has resigned from her position of the US ambassador to the United Nations (UN), citing she wanted to “take a break” from government service. She is the third senior member of Donald Trump’s national security team to resign over the past seven months.

Focus today will shift to the health of the UK economy. Analysts forecast GDP will have expanded by 0.1 per cent in October. Above-expectations growth data will strengthen the Pound further.

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