Brexit vote prompts surprise jump in Sterling
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Brexit continued to be the main catalyst of movement in the pound last week, with the UK currency unexpectedly rallying despite Theresa May’s EU withdrawal deal being overwhelming rejected by MPs.
However Sterling appears to have run out of momentum this week, with GBP/EUR muted at €1.1299 and GBP/USD flat at US$1.2854.
Coming up this week will be the European Central Bank’s first policy meeting of 2019, with the euro likely to dip if the bank strikes a more cautious tone following the recent run of weak Eurozone data.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Pound climbs on hopes no-deal Brexit will be avoided
The pound continued to trend higher last week as investors became increasingly optimistic that a no-deal Brexit will be avoided in the wake of the PM’s crushing defeat in the House of Commons.
Sterling’s rally following the vote came as a bit of a surprise to many traders, with most analysts predicting a defeat for May would be GBP negative ahead of the vote.
However it appeared that the extent of the defeat stoked speculation that there could be a delay to Brexit or a revoking of Article 50 altogether. As most observers ruled out a no-deal Brexit this helped to propel the pound to a two-month high on Thursday.
However Sterling retreated from its best levels at the very end of the week as investors soured on the UK currency following a larger-than-expected contraction in UK retail sales in December.
Following May’s address to parliament on Monday afternoon, in which she will outline her next steps for Brexit, the focus for GBP investors this week is likely to be on the UK’s latest employment figures.
This may see Sterling appreciate on Tuesday if wage growth is revealed to have held at a decade high in November as it bolsters the case for the Bank of England (BoE) to raise interest rates in 2019.
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* Information courtesy of Currencies Direct, Philip McHugh
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)
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.
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