Deal or no deal?

The pound ebbed and flowed yesterday amid conflicting news reports regarding whether or not a Brexit deal in time for this week’s European Summit is likely . However, the chief negotiator on the EU side, Michael Barnier, has this morning struck a cautiously optimistic note – saying the two sides are working hard, the negotiations are intense, and that it is still possible to reach a deal this week –  in turn sending sterling towards its highs of late last week (which were just under 87p against the euro and just over 1.27 against the dollar)

Elsewhere, the euro continues to trade in a narrow range against the dollar (it is hovering around $1.1050 this morning), while in the bond markets, yields have eased back from their highs at the close of business on Friday with the market treating the US-China (partial) trade deal struck at the weekend with some caution (as we know from experience, one Trump tweet could und everything)

Manufacturing output in the Euro area rose for the first month in three in August, a welcome reprieve, though it was still running almost 3% below its level in August 2o18

Bank of England MPC member Cunliffe says that, with interest rates already at low levels (not just in the UK but elsewhere as well), it reduces the space for monetary policy to respond in the event of a downturn

Data due this week include the latest labour market report in the UK and the ZEW Index of investor sentiment in the Euro area