This morning’s preliminary business activity PMIs out of the Eurozone also did little to support the common currency. The composite PMI, which represents a weighted average of both the manufacturing and services sectors, slowed to 54.9 from 56.7 following a fairly abrupt slowdown in services output. Investors had expected a very modest down-tick to 56.5. Consumer confidence data for October was mildly encouraging yesterday, increasingly to -1.0 from -1.2.

Sterling steady despite PM May Brexit optimism

Sterling traded within a relatively narrow range against the US Dollar as markets opened for the week on Monday, with the market mostly taking Brexit optimism in its stride.

Theresa May’s comments hailing ‘important progress in EU talks did little to inspire any sort of rally in the Pound. The PM claimed she was ‘ambitious and positive’ about future negotiations during her speech yesterday, describing talks as being constructed in a ‘constructive spirit’.

Meanwhile, with an interest rate hike in the UK in November already mostly priced into the value of Sterling, investors largely overlooked somewhat dovish comments from Bank of England rate-setter Jon Cunliffe yesterday afternoon. Cunliffe claimed that the economy ‘has clearly slowed this year’, and that interest rates will not go up by as far and as fast as they did before the financial crisis in 2008. He also suggested that the crisis was still having an effect on productivity in the UK.

With no economic data releases on the docket in the UK today, Sterling will be largely driven by political developments. We instead look to Wednesday’s preliminary GDP numbers for the third quarter.