After an initial wobble, the pound closed Monday’s session on a steady footing as Theresa May presented her Brexit ‘Plan B’ to Parliament.
Sterling is on the back foot this morning however, with GBP/EUR muted at €1.1048, GBP/USD subdued at $1.2769 and GBP/CAD flat at C$1.6900, while both GBP/AUD and GBP/NZD edge lower, striking AU$1.771 and NZ$1.8809 respectively.
Meanwhile, Brexit is likely to remain in the spotlight through today’s session, potentially dragging on Sterling sentiment if Theresa May struggles to build support for her Brexit deal.
What’s been happening?
The pound struggled to find its own momentum yesterday as Brexit uncertainty continued to weigh heavily on the UK currency.
The UK government faced another setback yesterday as MPs voted to impose a three-day deadline on the government to come up with a ‘Plan B’ should its Brexit deal be rejected next week.
However this wasn’t enough to prevent the GBP/USD exchange rate from advancing yesterday as the US dollar softened with the latest FOMC minutes underscoring some dovish comments from Federal Reserve policymakers earlier in the session.
Meanwhile, the GBP/EUR exchange rate weakened yesterday as the euro was lifted by both a surprise drop in Eurozone unemployment to a new decade-low in November as well as the dip in the US dollar.
What’s coming up?
Looking ahead, Brexit is likely to continue to dominate Sterling sentiment today as MPs carry on debating May’s withdrawal deal.
This may result in further volatility in the pound throughout the session, especially if it appears that opposition to the PM’s withdrawal deal remains strong.
Meanwhile, the minutes from the European Central Bank’s (ECB) are likely to be devoured by EUR investors today as they look for any signs that policymakers may have some apprehensions about targeting a rate hike this year.
Finally, the Fed will remain in focus for USD investors today, with the US dollar potentially sliding if Chairman Jerome Powell doubles down on his recent dovish rhetoric in a speech this afternoon.
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)