The Pound was unravelling in a risk-off market Monday as currency traders responded to a cocktail of negative domestic and international headlines at the beginning of what is set to be an action-packed week for the British currency, as the Brexit saga rolls on and central banks on both sides of the Atlantic say their bit.
Sterling advanced against all major rivals Friday after being boosted by speculation suggesting the British government could be softening its red lines on the so-called Northern Irish backstop in pursuit of an amicable exit agreement with the EU ahead of an October 31 deadline.
The Pound traded in volatile swings against most major rivals Thursday and was lower against its European counterparts by the London close but higher relative to commomity currencies and the U.S Dollar, with international factors firmly in the driving seat of the British unit amid another period of limbo in the Brexit process.
The British Pound is being tipped to remain supported over coming days, amidst growing signs that Prime Minister Boris Johnson's strategy going forward now rests on reaching a new deal with the EU, while labour market data has come in better than economists had been expecting.
Parliament will be suspended today it has been confirmed, and we therefore expect nerves towards Sterling to remain elevated in the near-term as the Government seeks ways to foil parliament's demands for a Brexit delay to be requested of the EU.
The British Pound is trading near recent highs against the Euro, and is forming a base near multi-month lows against the Dollar as markets judge the prospect of a 'no deal' Brexit taking place on October 31 has diminished over the course of the past week.