The pound is at its highest level against the US Dollar since the EU Referendum, breaking GBP/USD 1.39 earlier today (Friday). It has also climbed against the euro, rising 1.2% midweek to 1.1350.
Brighter Brexit
This pound-positive activity is due to a brighter Brexit outlook; both Spain and the Netherlands suggested they would support the UK remaining closely aligned with the EU in terms of trade and Jean-Claude Juncker hinted that Britain could rejoin the EU after Brexit. This new-found optimism had a positive impact on the markets but as we know everything is temporary and there are bound to be more Brexit hurdles very soon.
US Budget Crisis
More interesting is the weakness of the US dollar which is sensitive to a potential government shutdown. The clock is ticking for lawmakers to pass a new budget or a shutdown will be triggered. Why? Congress failed to agree a spending plan for 2018 so the US is currently operating under a temporary funding measure which expires on 19 January. Unless Congress and the White House agree on a spending plan, the government will run out of money. By law it would be forced to stop many services and close facilities until a new budget is agreed.
Snow report
Significant fresh snow is forecast for 4 Spanish Ski Resorts: Baqueira-Beret, Boí Taüll, Cerler and Formigal. One minute the sun is shining, the next you can’t see the tips of your skis – very much like the currency markets! Make sure you are prepared for unexpected conditions and get a good pair of currency goggles!
