Pound Spikes Up As EU Agrees To Brexit Delay

The pound strengthened against its major counterparts in early European deals on Monday, as the European Union had agreed for a three-month extension to Brexit as British Prime Minister Boris Johnson pushes for an early election in the parliament.

The European Council President Donald Tusk tweeted that the EU member states agreed to accept the UK’s request for a Brexit flextension until January 31, 2020.

The decision will be formalised through a written procedure, he added.

The draft agreement stipulated that the withdrawal deal cannot be renegotiated in future.

A Parliamentary vote on motion for an early election is due today.

Opposition parties have indicated that they would back a general election, if a no deal Brexit is off the table.

On the trade front, media reports suggested that the U.S. and China were “close to finalizing” a first-stage agreement to scale back their trade war.

The Office of the U.S. Trade Representative said the countries have “made headway on specific issues and the two sides are close to finalizing some sections of the agreement.”

On Saturday, China’s Commerce Ministry said both sides are “close to finalizing” some parts of a trade agreement after high-level telephone discussions on Friday.

U.S. President Donald Trump said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile.

The pound showed mixed trading against its major counterparts in the Asian session. While it fell against the euro, it held steady against the rest of major counterparts.

The pound climbed to 1.2859 against the greenback, after falling to 1.2810 at 5:00 pm ET. The currency may possibly challenge resistance around the 1.30 level.

The pound appreciated to 139.85 against the Japanese yen, from a low of 139.28 seen at 5:00 pm ET. The currency is seen locating resistance around the 142.5 level.

Data from the Bank of Japan showed that Japan producer prices rose 0.5 percent on year in September – in line with expectations and unchanged from the August reading following a downward revision from 0.6 percent.

On a monthly basis, producer prices were flat following the 0.1 percent decline in the previous month.

The U.K. currency advanced to a 4-day high of 1.2792 versus the franc, following a decline to 1.2739 at 5:45 pm ET. On the upside, 1.31 is possibly seen as its next resistance level.

The pound strengthened to a 4-day high of 0.8627 against the euro, up from a low of 0.8650 it logged at 2:00 am ET. The next possible resistance for the pound is seen around the 0.84 level.

Data from Destatis showed that German import prices decreased at a slower than expected pace in September.

Import prices dropped 2.5 percent year-on-year in September, following a 2.7 percent fall in August. This was slower than the 3 percent decline economists had expected.

Looking ahead, U.S. wholesale inventories and advance goods trade data for September are due in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com