Pound US dollar exchange rate tumbles to six-week low amid growing Brexit uncertainty
Philip McHugh October 25th 2018 - 2 minute read
The pound was placed on the defensive on Wednesday as growing Brexit anxiety left the currency looking sorry for itself.
Sterling appears more buoyant this morning however as GBP/EUR ticks up to €1.1321, GBP/USD climbs to $1.2915 and GBP/CAD steadies at C$1.6831, while GBP/AUD and GBP/NZD both creep higher to strike AU$1.8282 and NZ$1.9818 respectively.
Looking ahead, the latest rate decision by the European Central Bank (ECB) will likely result in the euro being centre stage in today’s trading session.
What’s been happening?
The pound suffered another sell-off on Wednesday, with renewed Brexit uncertainty prompting the UK currency to cede ground once more.
The pound’s losses come as investors become increasingly unnerved by the political atmosphere in the UK, with observers suggesting that Theresa May faces growing criticism from within her own party regarding suggestions she may look to extend the Brexit transition period.
However this weakness in Sterling was not reflected in the GBP/EUR exchange rate yesterday, with the pairing actually strengthening in the wake of the Eurozone’s latest PMI figures, which dragged on the euro as they showed the slowdown in the bloc’s private sector intensified this month.
Consequently the weakness witnessed in both the pound and the euro proved a boon for the US dollar on Wednesday as investors flocked to the safe-haven currency, although the GBP/USD exchange rate was offered a small reprieve later in the afternoon as US new home sales came in lower than expected.
What’s coming up?
The euro will be in the spotlight today as the European Central Bank concludes its latest policy meeting.
No policy changes are expected to be announced today, but investors are wary of a possible fall in the euro if the Eurozone’s less than stellar growth this year leads to a more cautious tone from ECB President Mario Draghi in his following press conference.
Meanwhile the US dollar may be forced to retreat this afternoon with the release of the latest US durable goods orders, with economists forecasting that order growth slumped from 4.5% to -1% in September.
Finally, the pound is likely to remain subdued through today’s session as well, with a lull in UK data likely to leave GBP investors firmly focused on Brexit.