Pound steadies as May hints at second Brexit vote

Philip McHugh December 3rd 2018 - 2 minute read

The pound steadied at the end of last week following reports Theresa May remained open to a second parliamentary vote on her Brexit deal if the first one fails to pass.

Trade in Sterling is mixed at the start of this week’s session however, with GBP/EUR steady at €1.1263, GBP/USD accelerating to $1.2797, while GBP/CAD slides to C$1.7333 and GBP/AUD and GBP/NZD both tumble, striking AU$1.7333 and NZ$1.8486 respectively.

Coming up later this morning will be the release of the UK’s latest manufacturing PMI, with the pound poised to strengthen if factory growth accelerated last month as expected.

What’s been happening?                    

The pound was muted at the end of last week’s session following Theresa May’s suggestion that she would be open to a second parliamentary vote on her Brexit deal if it fails to pass in an upcoming vote.

In an interview with the BBC, May said that while she was currently focused on getting her deal through the Commons on the 11 December, it may not be the final vote on the matter.

This helped to buoy Sterling on Friday as it suggests the upcoming vote will not be the death knell for May’s withdrawal deal.

The GBP/EUR exchange rate fell back on Friday, but the euro found its gains trimmed by the release of the Eurozone’s latest CPI figures, with EUR investors disappointed to see that inflation in the bloc had slowed faster than expected in November.

Meanwhile the GBP/USD exchange rate dipped at the end of last week’s session, with the US dollar being propelled higher by an upswing in safe-haven demand ahead of the meeting between President Trump and President Xi over the weekend.

What’s coming up?

The pound may be granted some temporary relief from Brexit worries at the start of this week’s session as the UK publishes its latest Manufacturing PMI.

This may see Sterling accelerate this morning as factory growth is forecast to have rebounded last month after slumping to a two-year low in October.

Meanwhile, the release of the ISM manufacturing PMI may strengthen the US dollar this afternoon if US factory activity remained robust in November, as forecast.

Finally, the euro may get off to a slow start this week as the Eurozone’s own manufacturing index is expected to confirm the bloc’s factory sector slowed to its lowest levels since May 2016.

Written by
Philip McHugh

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