Pound fluctuates on mixed Brexit outlook
[vc_row][vc_column][vc_column_text]Trade in the pound was mixed last week as renewed confidence of an August rate hike from the Bank of England was offset by a blurry outlook regarding Brexit.
The mixed trade in Sterling looks set to continue at the start of this week as GBP/EUR slides to €1.1224, while GBP/USD edges up to US$1.3109.
Looking ahead, an expected rate hike from the Bank of England (BoE) is likely to drive some significant movement in currency markets this week, possibly resulting in some gains for the pound.
The pound was hit by volatility last week, with the currency trading in a wide range in light of the latest Brexit developments.
Kicking this off was Theresa May’s announcement on the last day of Parliament where she declared that she would be taking personal control of Brexit negotiations.
The news helped to buoy the pound through the first half of the week on hopes her direct involvement would help to expedite talks as well as increase the chances of a ‘soft’ Brexit.
Also lending support to Sterling during the middle of the session was renewed confidence in there being a Bank of England (BoE) rate hike, with a lack of communication to suggest otherwise prompting GBP investors to price in an August hike.
The pound began to struggle in the latter half of the week however, with a lull in domestic data leaving the currency exposed; something which then saw the GBP exchange rate tumble as the EU rejected May’s customs proposal, increasing the odds of there being a no-deal Brexit.
Looking ahead to this week’s session, with the BoE widely expected to raise interest rates this week, trade in the pound is likely to remain fairly robust throughout the first half of the session.
However, what movement there will be after the hike remains a little unclear, with Sterling’s wings potentially being clipped should the BoE implement a ‘dovish hike’, thus leaving the GBP exchange rate exposed to losses if the latest UK PMI figures slide, as expected.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
To request an instant quotation on a currency quotation please click here
* Information courtesy of Currencies Direct, Philip McHugh
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
[/vc_column_text][/vc_column][/vc_row]
