Pound US dollar exchange rate mounts recovery as May faces no-confidence vote
Philip McHugh December 12th 2018 - 2 minute read
The pound made some tentative gains yesterday amid cautious optimism surrounding Brexit as Theresa May met with EU leaders in an attempt to save her Brexit deal.
Sterling is continuing to rise this morning following the news that May will face a vote of no-confidence later today, with GBP/EUR up at €1.1063, GBP/USD rising to at $1.2525 and both GBP/CAD and GBP/AUD similarly boosted at C$1.6755 and AU$1.7369 respectively, while GBP/NZD goes higher to NZ$1.8254.
In focus today will be the release of the latest US CPI figures, with the US dollar poised to slide if inflation slowed last month as forecast…
What’s been happening?
The pound sought to mount a recovery on Tuesday as the currency shook off Monday’s Brexit angst amid hopes Theresa May could secure some last minute concessions on her withdrawal deal as she met with a number of EU leaders and officials.
Lending further support to Sterling yesterday was the release of the UK’s latest employment figures.
This showed that wage growth in the UK struck a 10-year high in October, bolstering speculation of a rate hike from the Bank of England (BoE) in the New Year so long as the government is able to clear up some of the recent Brexit uncertainty.
After struggling to make any headway through the first half of yesterday’s session, the GBP/EUR exchange rate was able to claw higher in the afternoon as the euro was undermined by fresh Italy budget woes after Rome vowed to stick to its guns.
Meanwhile the GBP/USD exchange rate found some temporary gains on Tuesday after reports emerged suggesting that Beijing is preparing to cut tariffs on US cars, clipping demand for safe-haven currencies such as the US dollar.
What’s coming up?
Looking to today’s session, the news that Theresa May will face a vote of no-confidence later this evening is likely to hang over the pound throughout the day, likely presenting considerable downside risks to the UK currency.
Meanwhile the US dollar may see some notable movement today as markets brace for the release of the latest US consumer price index.
An expected fall in US inflation in November is likely to reflect poorly on USD this afternoon as it is likely to be seen as further strengthening the case for the Federal Reserve to pause its rate hikes next year.
Finally, the euro may strengthen this morning as the latest Eurozone factory figures are expected to show industrial production in the bloc accelerated last month.