Yesterday was a rough day for the pound as it became increasingly clear that the Prime Minister, Theresa May, was living on borrowed time. Following the almost universal rejection of her ‘new’ EU withdrawal deal, pressure mounted on her to resign.
Sterling appears to have found a more solid footing this morning however, with GBP/EUR rising to €1.1596, GBP/USD stable at $1.3107 and GBP/CAD flat at C$1.7527, while GBP/AUD and GBP/NZD both hold steady at AU$1.8476 and NZ$1.9068 respectively.
Potentially providing a brief distraction from Brexit today will be the release of the Eurozone’s latest PMI figures, with the euro set to fall if the bloc’s private sector continued to stagnate in March.
What’s been happening?
The pound was beset by volatility on Thursday as ongoing Brexit drama rocked confidence in the UK currency, and saw GBP touch new multi-week lows against most of its peers.
This initially drove heavy losses in Sterling, as Theresa May arrived in Brussels to attempt to persuade EU leaders to grant her an extension to Brexit.
However the pound had rallied again by the evening, recouping much of the day’s losses as the EU agreed to delay Brexit beyond 29 March.
This Brexit uncertainty briefly propelled the GBP/EUR exchange rate to a new three-week low on Thursday afternoon, before a sharp rebound in the pairing later in the evening, aided by the release of some weaker-than-expected Eurozone consumer confidence figures.
Meanwhile, the GBP/USD exchange rate slumped over 1% to strike a fresh one-week low yesterday, as the chaos and uncertainty surrounding Brexit saw demand for the safe-haven US dollar skyrocket.
What’s coming up?
Looking ahead, temporarily displacing Brexit today may be the release of the Eurozone’s latest PMI figures.
Economists forecast today’s figures will show that growth in the bloc’s private sector will have remain muted in March, potentially stoking concerns that the Eurozone will have stagnated in the first quarter and likely limiting the appeal of the euro.
Meanwhile, the US dollar may look to maintain its upward trajectory today, with the latest US housing data expected to show that existing homes sales rebounded in February.
Finally, while the BoE will publish its latest quarter bulletin today, expect it to be largely ignored by GBP investors, with movement in the pound likely to continue to be dominated by Brexit sentiment.
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)