GBP/EUR touches 19-month high on soaring Brexit optimism
[vc_row][vc_column][vc_column_text]The pound enjoyed its fourth week of consecutive gains last week, with Sterling striking new multi-month highs against its peers as it was bolstered by a growing feeling that the UK will avoid a no-deal Brexit.
Sterling appeared to have run out of steam this week however, with GBP/EUR dipping to €1.1538 and GBP/USD flat at US$1.3178.
Brexit is likely to remain the main catalyst of movement this week, with a parliamentary debate on Theresa May’s Brexit ‘Plan B’ likely to be in the spotlight for GBP investors.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]While Brexit was the main catalyst behind GBP last week, Sterling’s initial gains were actually driven by the release of the UK’s latest employment figures, with GBP investors cheering as domestic wage growth struck a new decade-high in November.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Pound strengthens significantly on hopes no-deal Brexit will be avoided
The pound soared higher last week, with the UK currency striking new multi-month highs, fueled by speculation the UK would avoid a no-deal Brexit.
While Brexit was the main catalyst behind GBP last week, Sterling’s initial gains were actually driven by the release of the UK’s latest employment figures, with GBP investors cheering as domestic wage growth struck a new decade-high in November.
By the mid-week the focus was firmly back on Brexit, with the pound enjoying support as Labour leader Jeremy Corbyn suggested his party may back an amendment that would seek to block a no-deal Brexit and potentially extend Article 50.
However Sterling really picked up the pace late on Thursday, following reports Theresa May’s ‘Plan B’ had the conditional backing of the Democratic Unionist Party (DUP), further buoying optimism that a no-deal Brexit would be avoided.
Looking ahead, Tuesday’s parliamentary debate on the PM’s Brexit ‘Plan B’ is set to be a major source of volatility in the pound this week, with either the passing of May’s deal or approval of an amendment to delay Brexit likely to strengthen GBP exchange rates.
Conversely, Sterling may retreat following the vote if MPs remain deadlocked on the deal, as it risks the UK inadvertently falling out of the EU without a trade deal.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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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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