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Pound Advances On Brexit Deal Hopes

The pound drifted higher against its major counterparts in the early European session on Tuesday, as investors cheered comments from EU negotiator Michel Barnier suggesting that a Brexit deal could be reached this week.

Speaking in Luxembourg, Barnier said that a deal with Britain over the terms of their divorce is still possible this week.

Barnier, however, struck a cautiously upbeat note, saying more tough talks are still needed.

Data from the Office for National Statistics showed that the UK unemployment increased and employment declined in three months to August.

The number of people in work fell 56,000 to 32.69 million and the level of unemployment increased by 22,000 to 1.31 million in three months to August.

The currency fell against its major counterparts in the Asian session.

The pound advanced to a 4-day high of 137.58 against the yen, from a low of 136.52 seen at 8:30 pm ET. Next immediate resistance for the pound is seen around the 142.5 level.

Final data from the Ministry of Economy, Trade and Industry showed that Japan’s industrial production declined in August as initially estimated.

Industrial production dropped 1.2 percent month-on-month in August, reversing a 1.3 percent rise in July. That was in line with the preliminary estimate.

Having dropped to 1.2598 against the greenback at 5:00 pm ET, the pound reversed direction, touching a 4-day high of 1.2698. The pound is seen locating resistance around the 1.30 level.

The pound strengthened to 1.2666 against the Swiss franc for the first time since June 12. The currency may possibly challenge resistance around the 1.30 level.

Data from the Federal Statistical Office showed that Switzerland’s producer and import prices declined at a faster-than-expected rate in September.

The producer and import prices declined 2.0 percent year-on-year in September. Economists had expected a 1.7 percent fall.

The pound spiked higher to 0.8690 against the euro, its biggest since May 15. Should the pound rallies further, it is likely to test resistance around the 0.84 mark.

Looking ahead, Canada existing home sales for September and New York Fed’s Empire manufacturing survey for October will be featured in the New York session.

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