Pound exchange rates slide as Brexit fears return
Philip McHugh June 25th 2018 - 2 minute read
The pound fell back at the very end of last week’s session, relinquishing a large proportion of the gains made on Thursday as Brexit uncertainty returned with a vengeance.
Sterling appears to be mostly flat this morning, with GBP/EUR trading narrowly at €1.1375, GBP/CAD stable at C$1.7603, and both GBP/AUD and GBP/NZD holding steady at AU$1.7826 and NZ$1.9178 respectively. Meanwhile GBP/USD is currently falling back, with the pairing striking $1.3238.
Looking ahead, Brexit is likely to remain a dominant force in currency markets this week as markets await an EU summit at the end of the week…
What’s been happening?
After roaring higher on Thursday on the back of the Bank of England’s latest policy meeting, the pound fell back against the majority of its peers as Brexit concerns began to weigh on the currency once more.
Sterling was dragged lower on news that a number of businesses operating in the UK have recently said that a lack of clarity and possibility of a ‘no deal’ Brexit could cause them to halt investment in Britain, putting thousands of jobs under threat.
At the same time, Prime Minister Theresa May is still ruling out staying within the EU customs union, compounding fears of a hard Brexit.
The pound failed to replicate its success against the euro at the end of the week however, with the GBP/EUR exchange rate sliding lower on Friday.
This came as EUR investors expressed relief following the release of the Eurozone’s latest PMI figures, which saw a slight uptick in growth put an end to five months of consecutive slowing activity in the bloc’s private sector.
Meanwhile the GBP/USD exchange rate was able to stabilise on Friday following a pullback in the US dollar.
The retreat in USD appeared to be driven by the perception that the currency may have been overbought in recent weeks, prompting a bout of profit taking before the session closed for the weekend.
What’s coming up?
This week is likely to see movement in the pound dominated by Brexit in the coming days as markets brace for an EU summit later this week.
The June summit is seen as a key date in the Brexit timetable, with the UK government set to publish its Brexit whitepaper outlining its proposals on how it plans to leave the EU and hopefully allow for the start of Brexit trade discussions.
Meanwhile the euro may start this week’s session on the back foot with the release of Germany’s latest business sentiment figures likely to weaken the single currency, if they print in line with market expectations.
Finally the US dollar may get a lift this afternoon as economists forecast today’s US housing figures will reveal new home sales will have ticked up slightly in May.