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Pound rangebound as UK politics returns to the fore

currency-newsPound rangebound as UK politics returns to the fore
The pound struggled to find momentum yesterday as the reconvening of parliament brought UK politics and Brexit back into focus.

Sterling opens today’s session on a fairly solid footing, with GBP/EUR climbing to €1.1791, GBP/USD accelerating to $1.3152, and GBP/CAD buoyed at C$1.7077. GBP/AUD is holding at AU$1.9107 but GBP/NZD has retreated to NZ$1.9716.

Looking ahead, Boris Johnson will meet with European Commission President Ursula Von Der Leyen later today, with the pair expected to discuss the next stage of Brexit negotiations.

What’s been happening?

The pound was left directionless on Tuesday as UK politics and Brexit were back in the spotlight as MPs returned to Westminster.

The reconvening of parliament saw MPs resume the debate on Boris Johnson’s EU withdrawal deal, which is widely expected to glide through the House of Commons thanks to the PM’s overwhelming majority.

The euro also struggled to find support yesterday in spite of upbeat economic data. Separate reports revealed Eurozone inflation accelerated to a six-month high while retail sales growth beat expectations in November.

This left the US dollar as the main winner yesterday, with the currency surging as the latest ISM manufacturing PMI reported the US service sector accelerated in December.

What’s coming up?

Top of the agenda today is a meeting between Boris Johnson and Ursula Von Der Leyen in Downing Street.

The meeting will be watched closely by GBP investors as the two leaders are likely to discuss how the next stage of Brexit negotiations will play out.

But this could see the pound come under pressure if Johnson uses the meeting to underscore his resolve to not extend the Brexit transition period past December 2020.

Meanwhile, the euro looks to be off to a poor start this morning after Germany reported another slump in domestic factory orders in November.

However the single currency may still be supported by the Eurozone’s business confidence figures later in the session if they report economic sentiment in the bloc improved last month.

Finally, the US dollar may continue to trend higher this afternoon with the publication of the ADP employment figures, where an expected rise in employment is likely to bode well for Friday’s more influential payroll figures.
 
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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