The pound climbed to multi-month highs
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Lower odds of no-deal Brexit spur pound surge
The pound climbed to multi-month highs against the majors as worries over the threat of a potential no-deal Brexit eased, benefitting from the promise of additional parliamentary votes.
A better-than-expected uptick in February’s German consumer price index offered support to the euro, meanwhile, as inflation in the Eurozone’s powerhouse economy showed signs of life.
With the Federal Reserve looking set to leave interest rates on hold for the foreseeable future the upside potential of USD exchange rates was limited, particularly in the face of market risk appetite.
However, the New Zealand dollar came under renewed pressure thanks to the underwhelming nature of February’s trade data and fresh signs of a slowdown within the Chinese economy.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]As the odds of a no-deal Brexit dropped sharply, spurred by the promise of a parliamentary vote and potential extension to the March deadline, this gave the pound a solid boost against its rivals.
GBP exchange rates climbed to multi-month highs on Wednesday as investors bet against the prospect of the UK crashing out of the EU without a deal.
Although a significant degree of uncertainty remains over the future of the UK’s trade relationships with the EU and other countries this was not enough to keep the pound on the back foot.
However, GBP exchange rates were unable to maintain their bullish trend for long as February’s manufacturing PMI showed a decline on the month.
As high levels of stockpiling failed to drive sector growth the mood towards the pound soured, with the odds of a weaker gross domestic product reading growing.
If the corresponding services PMI also loses momentum this could leave the pound exposed to a fresh bout of selling pressure this week.
As the service sector remains the primary growth engine of the UK economy any slowdown here is likely to drag significantly on the first quarter GDP.[/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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