The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
Sterling remains on the defensive this morning, with GBP/EUR slipping to €1.1596, GBP/USD sliding to $1.3015 and GBP/CAD dipping to C$1.7474, while GBP/AUD and GBP/NZD have fallen to AU$1.8383 and NZ$1.9174 respectively.
Expect to see GBP exchange rates remain volatile today as MP’s vote on whether to accept the terms of the UK’s withdrawal agreement with the EU.
What’s been happening?
The pound fell back against the majority of its peers yesterday against a backdrop of ever growing Brexit uncertainty.
This was exacerbated throughout the European session by the government’s vague announcement that it would hold another Brexit vote today, but that it would not be the third meaningful vote on Theresa May’s deal, and rather just relating to the withdrawal agreement without the political declaration.
The slump in the pound saw the GBP/EUR exchange rate slide around half a cent yesterday, with the pairing only prevented from sliding further thanks to the euro being undermined by a shock contraction in German inflation this month.
Meanwhile, the GBP/USD exchange rate fell close to a one-week low on Thursday, despite the US dollar remaining largely muted in wider trade after US economic growth was revised lower in the final GDP reading for the fourth quarter.
What’s coming up?
Looking ahead, we expect to see this evening’s Brexit debate dominate movement in the pound today, as the vote will likely determine whether the UK leaves the EU on 12 April or 22 May.
This is likely to result in the UK’s latest GDP figures being sidelined by investors today, with the final reading for the first quarter likely to confirm that growth slowed to just 0.2% at the end of last year.
This will likely see the release of the final reading of the UK’s fourth quarter GDP figures side-lined this morning, as they are expected to confirm that UK growth slowed from 0.6% to 0.2% at the end of last year.
Meanwhile, the release of Germany’s latest retail sales figures earlier this morning is likely to provide the euro with a solid footing today following a surprise expansion in sales growth in February.
Finally, the US dollar may be offered some support this afternoon, if the latest US PCE price index delivers another robust inflation reading in January.
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)