Pound Rallies on Positive Brexit Meeting Between Johnson and Varadkar

The British pound today rallied to new 5-day highs against the US dollar after a positive meeting between Boris Johnson and the Irish Prime Minister Leo Varadkar. The GBP/USD currency pair had attempted to rally early in the London session, but was derailed by mostly negative UK macro releases and fell back to its opening lows.
The GBP/USD currency pair today rallied from an opening low of 1.2208 to a new 10-day high of 1.2424 on the Brexit developments and was near these highs at the time of writing.
The cable screamed higher today after British PM Boris Johnson and the Irish PM Leo Varadkar announced that they are close to agreeing on a Brexit deal. The pair rallied higher after the two leaders revealed that they had made progress on crucial issues behind the contested Irish backstop plan and were confident that a Brexit deal is possible by October 31. The pair’s initial rally was hampered by the release of the weak UK industrial production data by the Office for National Statistics early in the London session. UK industrial production contracted 0.6% in August versus the expected 0.1% while manufacturing production also fell short of expectations.
The pair fell after the release of the UK GDP report for August, which came in at -0.1% versus the expected 0.0% reading; the pair had a positive reaction to Mark Carney’s speech. The pair had a muted reaction to multiple US releases including the latest CPI print.
The currency pair’s future performance is likely to be affected by Brexit development’s given tomorrow’s empty UK docket.
The GBP/USD currency pair was trading at 1.2415 as at 17:24 GMT having rallied from a low of 1.2208. The GBP/JPY currency pair was trading at 133.91, having risen from a low of 130.87.

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