Reports UK is Prepared to Stay Within EU Customs Union Send GBP Higher

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Updated: May 17, 2018, 09:19 UTC

British Media has reported that the UK is to inform the EU that they are willing to stay in the EU Customs Union beyond 2021.

The Government agreed on a new “backstop” earlier this week to avoid a hard border on the island of Ireland. This came after rejecting earlier EU proposals ahead of the looming June deadline. This was despite objections from Foreign Secretary Johnson and Environment Secretary Gove. GBP has rallied well and is the strongest currency as we approach the European open, up from 1.34554 to 1.35687 against the USD. EURGBP is down to 0.87206 from yesterday’s high of 0.87823. The USD has weakened somewhat, with EURUSD reaching a high of 1.18373 overnight.

Eurozone Consumer Price Index – Core (YoY) (Apr) came in as expected, unchanged at 0.7%. Consumer Price Index (MoM) (Apr) was also as expected at 0.3%, from 1.0% previously. Consumer Price Index (YoY) (Apr) was also as expected, unchanged at 1.2%. Consumer Price Index – Core (MoM) (Apr) was as expected at 0.2%, from 1.4% prior. CPI data is showing a decrease in the monthly figures, with yearly figures remaining in line with the previous reading. EURUSD fell from 1.18376 to a low of 1.17662 after this data release.

US Housing Starts (MoM) (Apr) were 1.287M against an expected 1.310M, from a previous number of 1.319M, which was revised up to 1.336M. Building Permits (MoM) (Apr) were 1.352M against an expected 1.350M, with the prior reading of 1.354M, which was revised up to 1.377M. This data shows a decrease in activity from previous readings. These data points have been recovering since hitting lows of 0.46M and 0.49M respectively after the financial crisis. GBPUSD halted its decent at 1.34668 when the data was released.

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US Industrial Production (MoM) (Apr) was released, coming in at 0.7%. The consensus was for 0.6% from 0.5% previously, which was revised up to 0.7%. This measure rebounded strongly, to reach the highest reading since December 2014 in March, after slipping below the zero line previously. Capacity Utilization (Apr) was also released at this time, with a reading of 78.0% against the expectation of 78.4%, from 78.0% previously, which was revised down to 77.6%. The readings came in line with previous data, with capacity failing to create a new high and missing expectations. USDJPY rose from 110.056 to 110.341 after the release.

This article was written by FxPro

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Ed Andersoncontributor

Ed Anderson has over 35 years of experience in the financial markets, having worked in London, New York, Toronto, Singapore and Australia. Ed provides in-depth Fundamental and Technical Analysis, as well as frequent market insights on multiple asset classes, to the benefit of FxPro clients.