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Pound lingering at multi-month highs as MPs back election

currency-newsPound lingering at multi-month highs as MPs back election

The pound racked up serious gains earlier in the week and has (so far) largely managed to hold on to them.

The GBP/EUR exchange rate remains above the €1.19 level, GBP/USD is clinging to six-month highs of $1.28 and GBP/CAD advanced from C$1.7199 to C$1.7285. However, GBP/AUD eased back from A$1.7100 to A$1.7020 while GBP/NZD slipped from NZ$1.8321 to NZ$1.8144.

What impact could today’s speech from BoE Governor Mark Carney have on GBP? Keep scrolling to find out…

What’s been happening?

Although the pound has come away from the week’s best levels, the currency remains close to the multi-month highs achieved on Tuesday.

On Wednesday MPs voted overwhelmingly to back the Prime Minister’s decision to hold a snap general election on June 8th.

The House of Commons voted 522 to 13 in favour of bringing the general election forward from 2020, with SNP MPs abstaining. As all the major parties had previously voiced their support for an early election, the news failed to shift the pound.

The UK is now bracing itself for the onslaught of yet more political campaigning, although the present pound support is coming from the expectation that the Conservatives will increase their majority after June’s vote.

In other news, the New Zealand dollar was boosted by a domestic report detailing a surge in inflation in the first quarter of the year. New Zealand’s CPI came in at 1.0% on a quarter-on-quarter basis and 2.2% year-on-year – this was up from a previous annual figure of 1.3%.

This morning’s German producer price index came in below forecast levels, at 0.0% on the month and 3.1% on the year vs. predictions of 0.2% and 3.2%.

What’s coming up? 

Barring any fresh political surprises, today’s session could be a comparatively calm one for the major currencies. That being said, there are a couple of economic releases to look out for.

The Eurozone’s construction output figures for February are unlikely to have much impact on the euro, but the region’s consumer confidence gauge may prove more influential. The measure of sentiment is believed to have improved slightly from -5 to -4.8 in April.

However, with concerns about the outcome of the upcoming French election mounting, the index may actually register a dip in confidence – and such a result could weaken the euro.

We’ve also got a speech from Bank of England (BoE) Governor Mark Carney ahead. Carney may address monetary policy, and if he indicates that UK interest rates aren’t likely to rise for some time to come the pound may give up some of this week’s gains.

As the day’s US news (initial jobless claims/continuing jobless claims figures and the nation’s leading indicators report for March) isn’t the most market-moving, the US dollar could continue reacting to geopolitical tensions.

Philip McHugh

Philip McHugh

Phil joined the corporate foreign exchange department in 2000, and initially worked as a Senior Executive Dealer on the private client desk. In 2007, Phil moved to the corporate dealing desk as a corporate dealer and now oversees the corporate trading desk. Phil helps to manage the trading activity of the dealing desk and also works with a portfolio of corporate clients to help with their foreign exchange and risk management needs. Phil has attained FSA approval and has completed the Certificate in International Treasury Management (CertITM).

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Email: phil.m@currenciesdirect.com

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