Sterling jumped more than half a cent on Thursday to nearly a one-month high after German Chancellor Angela Merkel said a solution to the Irish border issue could be found before the October 31st deadline for Britain to leave the European Union. Yesterday Merkel backtracked on earlier comments that appeared to set Britain a 30-day deadline to find a solution to the so-called Irish backstop. Instead she said that the UK could have time until the Brexit deadline to find a compromise.
British Prime Minister Boris Johnson met Emmanuel Macron in Paris for Brexit talks, with the French president saying the UK’s vote to quit the EU must be respected. But he added that the Ireland-Northern Ireland backstop plan was “indispensable” to preserving political stability and the single market. Johnson wants the backstop – an insurance policy included in Britain’s Withdrawal Agreement with the EU to avoid the return of a hard border on the island of Ireland – scrapped. The EU says the current plan, which was approved by Johnson’s predecessor Theresa May, is not up for renegotiation. The meeting in Paris was followed with an amicable press conference and a pledge to work together over the coming month in an effort to bridge the Irish backstop gap.
A small uptick in private sector activity in the eurozone in August was not enough to dispel fears of lacklustre growth in the third quarter as Germany’s export-led factory sector continued to suffer from global trade tensions and weakening growth. woes of the German manufacturing sector were offset by a small pick-up in eurozone activity was the result of the resilience of the services sector in both France and Germany.
15:00 – USD: Fed Chair Powell Speaks