British Pound Climbs to Two-Year High on Optimism Over Brexit Trade Deal, Data

The British pound sterling advanced to its highest level against the US dollar in more than two years, driven by a weakening greenback and lower-than-expected inflation. The currency is also finding support on growing odds of a Brexit trade deal after officials stated that both sides are creating a path to establishing an agreement.

According to the Office of National Statistics (ONS), consumer prices rose 0.3% year-over-year in November, coming in lower than the market forecast of 0.6%. This is down from the 0.7% jump in October. The most notable declines in prices were food and non-alcoholic beverages, apparel, housing, and utilities.
Month-over-month, the consumer price index dipped 0.1%, falling short of the median estimate of a 0.1% boost.
The core inflation rate, which removes volatile food and energy commodities, surged 1.1% last month from the same time a year ago. Month-over-month, the core inflation rate slipped 0.1%, lower than the projection of a 0.2% increase.
The retail price index shed 0.3% last month, lower than the market prediction of 0.2%.
In other ONS data that contributed to gains on the FTSE 100, average house prices surged 5.4% in October to an all-time high of Â£245,000 ($331,000).
Producer price index (PPI) output fell at an annualized rate of 0.8%, while the PPI input also slumped 0.5% year-over-year in November.
British manufacturing is rebounding in December, with the IHS Markit/CIPS manufacturing purchasing managers’ index (PMI) surging to 57.3, beating the market estimate of 55.9 — anything above 50 indicates expansion. The UK services PMI came in at 49.9, while the composite PMI rose to 50.7.
The pound sterling is finding additional support on optimism that the UK and the European Union could soon establish a trade agreement. European Commission President Ursula von der Leyen said there was “a path to an agreement now,” confirming that both sides had “found a way forward on most issues.”
A sliding US dollar contributed to the pound’s rise, as well as intensifying investor confidence in the broad financial markets.
UK government bonds were flat across the board, including the benchmark 10-year bond that stood at 0.275%.
The GBP/USD currency pair rose 0.23% to 1.3497, from an opening of 1.3464, at 16:06 GMT on Wednesday. The GBP/JPY advanced 0.17% to 139.87, from an opening of 139.58.
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Original from: www.earnforex.com