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Pound tumbles as MPs reject government’s timetable for Brexit

currency-newsPound tumbles as MPs reject government’s timetable for Brexit
The pound was left reeling on Tuesday after MPs rejected Boris Johnson’s attempts to fast-track the Withdrawal Agreement bill through parliament.

Sterling is struggling to find momentum this morning, with GBP/EUR range bound at €1.1575, GBP/USD subdued at $1.2868, and GBP/CAD muted at C$1.6848. GBP/AUD and GBP/NZD are both holding steady at AU$1.8809 and NZ$2.0107 respectively.

Renewed Brexit uncertainty is sure to infuse fresh volatility into GBP exchange rates today, with all eyes on Brussels to see how the EU will respond to the latest drama.

What’s been happening?

The pound was left on the back foot through the European session yesterday, with markets wary ahead of a vote on Boris Johnson’s Withdrawal Agreement bill.

GBP investors were particularly unnerved by Johnson’s threat to pull the bill and push for a General election if it did not receive the backing of MPs.

While MPs backed the bill in principle, a subsequent vote on the timetable for passing the legislation by the end of the week ended in defeat for the government. The move resulted in a sharp drop in Sterling as Johnson ‘paused’ the bill.

Meanwhile, the euro also suffered as a result of yesterday’s Brexit developments, with fresh uncertainty undermining the single currency.

Capitalising on the souring risk appetite, the US dollar trended higher on Tuesday, reversing some of its recent losses thanks to renewed safe-haven demand.

Yesterday’s modest USD rally was also supported by the publication of the Richmond Fed manufacturing index, where a surprise rebound in factory growth in October helped to quell concerns over US economic slowdown.

What’s coming up?

Brussels is reluctantly back in the spotlight today as EU leaders are now forced to consider whether to grant another Brexit extension following last night’s Brexit vote.

Johnson is expected to call for an immediate election if the EU offers a delay until at least January, the prospect of which may fuel further volatility in Sterling.

For EUR investors the focus will be on the Eurozone’s latest consumer confidence figures. Expect to see the euro give up some ground this afternoon if consumer sentiment deteriorated again this month.

US economic data is thin on the ground today so expect market risk sentiment to continue to determine the direction of the US dollar, with USD investors also keeping an eye on Federal Reserve rate cut expectations.
 
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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