The pound jumped to its highest level in a few weeks after German Chancellor Angela Merkel suggested that a solution to the Irish backstop could be agreed prior to the 31st October.
This caused the pound to jump against a number of currencies most notably against the euro. At a news conference held in the Hague yesterday afternoon Merkel said that a deal could be done to protect the Good Friday Agreement as well as ensuring the integrity of the EU’s single market.
This news saw GBP/EUR hit its best level to buy euros since 27th July bringing some good news to euro buyers. The gains were increased after French President Emmanuel Macron suggested that the EU Withdrawal Bill could be amended in order to allow the EU to leave the European Union with a deal.
Previously, Macron has stated that he is not prepared to renegotiate the deal so the change in attitude has seen the pound rise against the single currency. Macron went on to say that ‘we should all together be able to find something smart within 30 days on both sides is there is goodwill on both sides and I believe there is.’
In the meantime, the euro suffered against the pound during yesterday’s trading session after German new orders declined by their fastest rate since April 2013. As Germany is the leading economy in the Eurozone any slowdown can often have negative impact of the value of the euro against a number of different currencies including vs the pound.
Although the data coming from the report by Markit concerning both manufacturing and Services saw an increase it was still relatively low. Manufacturing data showed a number of 47 which although beat the expectation of 46.2 any figure below 50 is negative so there is still clearly a big concern across the sector.
According to Andrew Harker from Markit ‘the risk remains, therefore that the euro area’s largest economy will have fallen into technical recession in the third quarter.’
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