Trade in the pound was mixed on Monday, with easing fears of a no-confidence vote being offset by Theresa May’s rejection of an extension to the Brexit transition period.
Sterling appears to be taking a breather this morning however, with GBP/EUR flat at €1.1485, GBP/USD muted $1.3142 and GBP/CAD stable at C$1.7208, while GBP/AUD and GBP/NZD hold steady at AU$1.8026 and NZ$1.9368 respectively.
Looking ahead, the Federal Reserve will be in focus today, with the US dollar potentially rallying if the bank strikes a more hawkish tone this evening.
What’s been happening?
The pound firmed against many of its peers on Wednesday, holding close to multi-week highs as hopes of an imminent Brexit deal continued to build.
This optimism came amid reports that the UK government is preparing to finalise a Brexit agreement by the end of November and was further lifted by the news that EU President Donald Tusk and Theresa May had spoken on the phone in an effort to step up efforts.
The GBP/USD exchange rate traded close to a three-week high in the wake of the US midterm elections on Wednesday as the ‘greenback’ was dented by fears Trump will be unable to push through further fiscal reforms after the Democrats wrested control of the House of Representatives from the Republicans.
Meanwhile the GBP/EUR exchange rate also struck higher yesterday as the euro traded in a narrow range following the release of the Eurozone’s latest retail sales figures.
What’s coming up?
The focus for markets today will undoubtedly be on the Federal Reserve as the bank gears up to deliver its latest interest rate decision.
While no policy changes are expected from the bank this month, the Fed’s policy statement will still be pored over by investors for any hints at the bank’s policy plans for the coming year, with the US dollar likely to strengthen if the bank maintains its hawkish outlook.
Meanwhile the European Central Bank will also be in the spotlight today with the publication of its latest economic bulletin, with a more cautious outlook from the bank likely to drag on the euro.
Finally Brexit is likely to remain as the main catalyst for movement in Sterling today amidst a lull in domestic data, with the pound potentially gaining if more positive headlines emerge.
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)