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Brexit was back in the spotlight last week, driving heavy losses in the pound as EU leaders rejected Theresa May’s Chequers proposals

However the pound looks to be mounting a recovery at the start of this week’s session, with GBP/EUR climbing to €1.1176 and GBP/USD surging to US$1.3156.

Looking ahead, the focus for investors this week will likely be on the US dollar as markets brace for an expected rate hike from the Federal Reserve on Wednesday.

Pound nosedives as no-deal Brexit risks build

The pound’s recent run of gains came to a sudden halt last week, with the currency being cast lower by a breakdown in Brexit talks between the UK and EU.

While Sterling may have ended last week in the doldrums, its performance throughout the rest of the week was broadly positive.

Sentiment was buoyed in the first half of the week by reports that the EU was ‘ready to improve’ its Irish border proposal.

Meanwhile on the data front, a surprise uptick in UK inflation on Wednesday as well was stronger-than-expected domestic retail sales on Thursday helped to lend strength to GBP.

Come Friday morning however the pound’s fortunes had begun to reverse, with the currency tumbling as EU leaders formally rejected Theresa May’s Chequers plan.

However the selling really intensified later in the afternoon as May made a defiant speech in which she confirmed talks were at an impasse and stoked fears the UK could crash out of the EU by saying that ‘no deal is better than a bad deal’.

Looking ahead, Sterling is likely to face further volatility this week as Brexit likely remains the main catalyst for movement.

However the UK’s final second quarter GDP reading could help to stabilise GBP at the very tail end of the session if the figures confirm the UK economy expanded at a robust rate of 0.4%.[/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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