Is a "Delicate Political Dance" Underway?

The President of the EU Council, Donald Tusk, is one of many EU figures to express doubt over Boris Johnson’s withdrawal agreement proposals. Another leading EU figure, chief negotiator Michel Barnier also has eyebrows raised over the proposal, one of which is the chief sticking point; conclusion of the Irish backstop.

The EU won’t close the door on negotiations however, as Barnier and Johnson’s European adviser, David Frost, are to hold another round of Brexit talks in Brussels which can only be described as a “delicate political dance”. Johnson claims to have a backup plan should Plan A go fully awry.

Things seem to have gone down a little better in Parliament, as key opponents to the previous Brexit deal, as well as a number of MPs who lost the whip of the Conservative Party in September appear to have a change in sentiment to back the new one, which may well indicate that a deal might pass on these proposals. This would go some way to explaining why the pound is, overall, moving higher against key currencies than yesterday. Over time, Johnson is starting to get increased backing within Parliament

To round up yesterday’s key data highlights:

• Australia PMI data increased

• French, German and EU PMI numbers all fell short of their previous figures

• EU MoM retail sales were higher.

In the US, PMI figures were marginally higher than August (with the exception of Non-Manufacturing which was slightly lower than the previous month), and initial jobless claim increased to 219k.

Looking ahead to later today: German construction PMI, UK new car sales, and more key US data: balance of trade, non-farm payrolls, unemployment rate average hourly earnings, imports and exports.

Levels at time of writing:

GBP/USD – 1.2331

GBP/EUR – 1.1239

EUR/USD – 1.0971

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