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Pound extends recovery as MPs reject Boris Johnson’s election demands

currency-newsPound extends recovery as MPs reject Boris Johnson’s election demands
The pound raced higher again yesterday as fading no-deal Brexit fears bolstered the appeal of the UK currency.

Sterling’s rally appears to have run out of steam this morning however, with GBP/EUR muted at €1.1080, GBP/USD flat at $1.2228 and GBP/CAD subdued at C$1.6152. GBP/AUD and GBP/NZD have both retreated, sliding to AU$1.7945 and NZ$1.9162 respectively.

UK politics will remain in the spotlight today as Boris Johnson prepares to speak to the public later this morning.

What’s been happening?

Easing no-deal Brexit fears helped propel the pound on Wednesday, with fading political uncertainty also lending the currency a leg up.

GBP exchange rates rallied through the evening as MPs backed the Brexit delay bill and rejected Boris Johnson’s calls for a snap election.

It wasn’t all plain sailing for Sterling however, with the currency facing some headwinds as the UK’s services PMI came in below expectations in August, prompting warnings the country may be ‘at risk of slipping into recession’.

Trade in the euro was mixed yesterday, with the single currency finding only limited support after incoming European Central Bank (ECB) President Christine Lagarde warned ‘highly accommodative policy is warranted for a prolonged period’.

Meanwhile, USD bulls were in hiding on Wednesday, with the US dollar facing broad losses as markets remain spooked by the shock contraction in the US manufacturing sector last month.

Analysts fear this is another indication the US may be headed towards a recession, reigniting speculation regarding future monetary easing from the Federal Reserve.

What’s coming up?

UK politics may continue to drive sentiment in the pound today, with Boris Johnson preparing to address the public outside Downing Street to set out the ‘vital choice that faces our country’.

In focus for USD investors today will be the ISM non-manufacturing PMI, where another lacklustre performance could add to the current pressure on the US dollar.

Finally, the euro could face an uphill battle today following the publication of Germany’s factory order figures earlier this morning, as July’s slump increases the risk of the country slipping into a recession this year.
 
Philip McHugh

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)

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