British Pound Sterling Forecast GBP Improves on EU Demands

November 10, 2015 - Written by Toni Johnson

STORY LINK British Pound Sterling Forecast GBP Improves on EU Demands

Pound Sterling (GBP) Rises after British Prime Ministers Outlines EU Relationship Reforms

The Pound Sterling (currency : GBP) has recorded strong gains in the global currency markets during recent hours.

The UK unit has been buoyed by this morning’s comments from British Prime Minister David Cameron regarding his nation’s demands for the reform of its relationship with the European Union.

Cameron outlined a four point list of objectives for Britain’s ongoing negotiations with Brussels and the market expressed its relief by supporting the Pound.

The UK leader’s demands included protection of EU free trade agreements for non-euroland nations, a reduction in EU ‘red tape’, an exemption from the EU’s aim of ‘ever closer union’ for Britain and a restriction of access to ‘in-work’ benefits for migrants from within the EU.

These demands were described by ‘EU exit’ campaigners as ‘disappointingly unambitious’ and the reaction amongst analysts suggests that they should prove relatively easy to achieve.

With economists estimating that a Brexit from the European Union could cause domestic GDP to shrink by up to 10%, the increased prospects that the UK will remain a member of the EU club after the long-promised ‘in / out’ referendum served to strengthen the Pound on the day.

Australian Dollar Strengthens after Weak Chinese Inflation Suggests More PBoC Stimulus Ahead

Elsewhere, last night’s Chinese inflation data for October came in at a year-on-year 1.3% versus analysts’ expectations of a 1.5% showing.

The figure makes further monetary easing from the People’s Bank of China more likely in the short term – a move which will favour the trade-driven Australian Dollar (currency : AUD) and New Zealand Dollars (currency : NZD).

UK Jobs Data to Provoke GBP/AUD Volatility Tomorrow

So far on the day, the Pound has managed to hold its own against the Dollar from Down Under and the Kiwi, with the effect of the price rise data from China being negated by the news regarding the UK government’s meek demands on Brussels. FX insiders forecast that all this could change tomorrow morning with the publication of the latest UK jobs data.

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