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Sterling gets boost on news UK to keep continued EU markets access

A report in The Times, suggesting the UK may have continued access to the European Union markets after Brexit, pushed up the Pound and raised hopes for a positive deal.

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UK banks and financial-services companies will have uninterrupted access to European markets after Brexit, according to a report in The Times.

Theresa May told 130 executives in the City of London yesterday, 31 October that she had struck a deal with the European Union that would guarantee continued access if British regulations remained broadly in line with Europe. The news provided a much-needed boost to Sterling, which is now hovering at 1.2910 against the Dollar.

In addition, Brexit Secretary Dominic Raab wrote to the Exiting the European Union Committee saying he would be happy to appear before it on 21 November “when a deal is finalised”. This has fuelled speculation that British and EU negotiators are close to a breakthrough on the “Irish backstop” issue.

Today, the Bank of England will announce its latest interest rate decision, publish minutes from its latest Monetary Policy Committee (MPC) meeting and release its quarterly inflation report. Despite the triple whammy, I do not expect too much excitement on the back of any of the releases, with the MPC expected to vote unanimously to leave interest rates on hold at 0.75 per cent.

With one eye on the much-anticipated US non-farm payroll (NFP) data release tomorrow, 2 November, the Dollar received a boost yesterday following positive private payrolls data from ADP. The release beat forecasts of 189,000, with 227,000 jobs created in October. Despite ramped up hires, the US job market is still tightening. With that in mind, the NFP release tomorrow could end the week with increased volatility.

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