The pound made some tentative gains yesterday amid cautious optimism surrounding Brexit as Theresa May met with EU leaders in an attempt to save her Brexit deal.
Sterling is showing more resilience this morning, with GBP/EUR stable at €1.1202, GBP/USD rallying to $1.2768 and GBP/CAD steady at C$1.6908, while GBP/AUD and GBP/NZD hold steady at AU$1.7285 and NZ$1.8333 respectively.
Coming up today will be the UK’s latest construction PMI, with the pound possibly dipping if growth slows in line with predictions.
What’s been happening?
The pound was driven lower again at the start of this week’s session, with Brexit uncertainty once more proving to be the source of Sterling’s woes.
The latest concerns came as a result of a row over the publication of the government’s legal advice on the EU withdrawal deal as well as speculation that Theresa May might resign as PM if her Brexit deal fails to pass through Parliament next week.
These worries also saw GBP investors largely shrug off the UK’s latest Manufacturing PMI, despite growth having picked up again in November.
Sterling’s weakness led to the GBP/EUR exchange rate sliding as much as half a cent yesterday, with the pairing nearing €1.11 as broad weakness in the US dollar proved to be a boon for the euro.
Meanwhile the GBP/USD exchange rate remained subdued at the start of the week, despite the US dollar trending lower against most of its other peers. The dollar had been undermined by easing trade tensions between the US and China following a successful meeting between President Trump and President Xi over the weekend.
What’s coming up?
Looking ahead, the release of the UK’s latest construction PMI may dent demand for the pound this morning as economists forecast activity in the sector will have slowed last month.
However at the same time, Sterling may also be influenced by Bank of England Governor, Mark Carney, this morning as he speaks in front of Parliament.
Meanwhile, the euro may continue to trend higher today if the Eurozone’s latest PPI figures reveal producer prices continued to accelerate in October.
Finally, the US dollar may remain subdued throughout Tuesday’s trading session as an empty US data calendar leaves USD with nothing to offset the slide in safe-haven demand.
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)