Pound exchange rates strengthen as May reschedules Brexit vote

Philip McHugh December 18th 2018 - 2 minute read

The pound ticked higher on Monday as Theresa May announced a new date for the delayed vote on her Brexit deal.

Sterling appears to be holding steady this morning, with GBP/EUR flat at €1.1118, GBP/USD stable at $1.2640, with GBP/CAD and GBP/AUD are muted at C$1.6947 and AU$1.7572 respectively, while GBP/NZD tumbles to NZ$1.8395.

Coming up today, the UK cabinet will meet to discuss whether or not to ramp up their no-deal Brexit contingency plans, potentially weakening the pound if they agree to do so.

What’s been happening?                        

The pound drifted higher at the start of this week’s session as Theresa May rescheduled the parliamentary vote on her Brexit deal.

The vote will now take place on 14 January after previously being postponed by the PM earlier this month after it appeared unlikely it would pass.

However the gains for Sterling proved limited as the uncertainty surrounding the whole Brexit process continues to hang over the currency.

The GBP/EUR exchange rate traded in a narrow range throughout yesterday’s session despite the release of the Eurozone’s latest CPI figures, which saw inflation revised down to 1.9% in November and dampening European Central Bank (ECB) rate expectations.

Meanwhile the GBP/USD exchange rate accelerated on Monday following the release of the latest Empire State Manufacturing Index, as a sharp drop in December added to concerns the sector may be slowing.

What’s coming up?

Looking ahead, Theresa May’s cabinet is set to meet later this morning to discuss whether or not to accelerate plans for a no-deal Brexit.

Should the cabinet decide it is prudent to ramp up preparations this may be seen as a sign that the risks of a no-deal Brexit have increased, potentially spooking some GBP investors and weakening the pound.

Meanwhile the euro may struggle today following yet another dip in Germany business confidence as it struck a two-year low in December.

Finally, the US dollar may remain rangebound despite an expected rate hike from the Federal Reserve tomorrow after President Trump levelled fresh criticism at the bank yesterday for its decision to continue hiking rates.

Written by
Philip McHugh

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