Pound boosted by hopes for Brexit clarity

Pound Sterling was on strong form last week, as markets were hopeful ahead of this week’s Brexit speech from the Prime Minister.

The pound has started on strong form this morning. The GBP/EUR exchange rate is up 0.3% to €1.1386, while the GBP/USD exchange rate is up half a percent to US$1.4032. GBP/AUD is flat at AU$1.7798, as is GBP/NZD at NZ$1.9115. However, GBP/CAD is up 0.6% to C$1.7721.

Keep reading to see which central bankers are likely to have an impact on the pound, euro, and US dollar today…

What’s been happening?

Pound Sterling ended the week on solid form on Friday. With no economic data on the calendar, markets were instead looking ahead to this week’s Brexit speech from Prime Minister Theresa May.

The speech is expected to see May outline the UK government’s position on trade and the transitional period ahead of negotiations in March.

The potential for more clarity over the Brexit process has been welcomed by markets, who bought the pound in the hopes that the UK government was beginning to get on top of the issue.

GBP/EUR recorded strong gains, helped by some mediocre Eurozone data.

Although German government spending beat forecasts in the fourth-quarter, prior consumption and capital investment both stagnated during the same period, while construction investment declined by a larger-than-expected -0.4%.

Exports solidly beat forecasts, but this was not enough to get markets excited.

The recent Federal Open Market Committee (FOMC) minutes were still weighing on the US dollar, which allowed the GBP/USD exchange rate to make notable gains.

Markets and analysts still aren’t sure whether the minutes were hinting at four rate hikes this year, or were trying to calm expectations and reinforce the idea that there will only be three.

What’s coming up?

It’s a sparse data calendar today for the UK, with the only domestic release being the BBA loans for house purchase figures for January.

Mortgage demand has fallen significantly over the past few months, so another drop would likely weaken the pound, as house purchases are seen as a good bellwether for general consumer confidence.

Bank of England (BoE) policymaker Jon Cunliffe is set to give a speech today after the close of trade, so the pound could remain on hold ahead of that.

While there is no Eurozone data of note on the calendar today, European Central Bank (ECB) President Mario Draghi is set to give a speech in Brussels today, which could cause significant volatility for the euro.

Similar to the UK and Eurozone calendars, there are little in the way of ecostats due for the US today, but Federal Reserve official James Bullard is set to speak on the US economy and monetary policy this afternoon.