Pound exchange rates muted as Carney issues dire warning on a no-deal Brexit

Philip McHugh September 17th 2018 - 2 minute read

Pound exchange rates muted as Carney issues dire warning on a no-deal Brexit

The pound ended up trading narrowly on Friday, with a doom-laden Brexit prognostication from Bank of England Governor Mark Carney leaving the currency at a standstill.

Sterling looks set to continue this trend at the start of this week’s session, with GBP/EUR muted at €1.1240, GBP/USD flat at $1.3081 and GBP/CAD stalling at C$1.7051, while GBP/AUD and GBP/NZD are both holding steady at AU$1.8273 and NZ$1.9950 respectively.

Looking ahead, the publication of the Eurozone’s final CPI reading for August looks set to be the only data release of note, with the euro potentially weakening if inflation is confirmed to have slowed last month.

What’s been happening?         

The pound was treading water against the majority of its peers at the end of last week’s session, following a speech from Mark Carney in which he warned that UK economic growth has been ‘dampened’ by the uncertainty surrounding Brexit.

This gloomy outlook followed on from remarks he reportedly made in a special cabinet meeting on Thursday in which he issued a dire warning to ministers that a no-deal Brexit could led to scenes akin to the 2008 financial crash, with unemployment rising to double digits and house prices plunging as much as 35% over three years.
The remarks unsurprisingly left Sterling facing some headwinds on Friday.

With the Eurozone’s latest trade figures being largely shrugged off by traders, movement in the GBP/EUR exchange rate was flat on Friday as investors reflected on the European Central Bank’s latest policy decision.

Meanwhile the GBP/USD exchange rate fell back on Friday, with a strong US consumer confidence reading helping to offset a drop in retail sales growth and prompting the US dollar to tick higher.

What’s coming up?

A lull in major data at the start of this week’s session means that the Eurozone’s latest CPI figures will be in focus this morning, with the euro potentially slipping if the figures confirm that inflation in the bloc slowed last month.

Barring any major Brexit developments, the absence of any noteworthy UK data releases may led to limited movement in the Pound today, with GBP investors likely to turn their focus towards the publication of the UK’s own inflation figures on Wednesday.

Finally the US dollar may see some movement with the release of the latest New York manufacturing index this afternoon, although given its relatively low impact USD investors may choose to instead remain focused on the ongoing trade dispute between the US and China.

Written by
Philip McHugh

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