Pound exchange rates slammed as Brexit vote postponed
Philip McHugh December 11th 2018 - 2 minute read
The pound entered freefall yesterday following a sharp rise in Brexit uncertainty after Theresa May announced that the vote on her Brexit deal would be delayed.
Sterling appears to have stabilised this morning however, with GBP/EUR flat at €1.1066, GBP/USD edging up to $1.2590 and GBP/AUD stable at AU$1.7491, while GBP/CAD and GBP/NZD climb to C$1.6894 and NZ$1.8327 respectively.
Coming up today, will be the release of the UK’s latest employment figures, but given the current Brexit angst they many prove to have a limited impact on GBP exchange rates.
What’s been happening?
The pound suffered heavy losses yesterday as Theresa May announced she would be postponing the parliamentary vote on her Brexit deal.
While this allows May to avoid what was widely expected to be an embarrassing defeat in the House of Commons today, it resulted in fresh uncertainty surrounding the whole Brexit process, leading investors to shun Sterling en masse.
Placing further pressure on the GBP/EUR exchange rate was the release of Germany’s latest trade figures, with a strong rebound in German exports in October helping to bolster hopes of a more robust GDP reading in the fourth quarter.
Meanwhile the GBP/USD exchange rate struck a 20-month low yesterday, despite the US dollar coming under pressure itself as Friday’s lacklustre US payrolls figures fuelled further speculation that the Federal Reserve may hold off on any extra rate hikes in 2019.
What’s coming up?
Looking ahead, the current uncertainty surrounding Brexit is likely to continue to drive volatility in the pound during today’s session as Theresa May meets with EU leaders in an attempt to save her Brexit plan.
This may lead investors to largely overlook this morning’s labour report, despite a potential rise in UK wage growth.
Meanwhile, the euro may relinquish some of Monday’s gains later this morning as the latest ZEW Economic survey is expected to show economists in the Eurozone became increasingly pessimistic in their outlook for the bloc.
Finally, the US dollar could face more broad weakness today as a dip in US producer price growth in November may cause further concern about a slowdown in the US economy and a potential rate pause from the Fed next year.