Pound exchange rates fluctuate as Brexit uncertainty grows

Philip McHugh February 25th 2019 - 2 minute read

The pound was hit by volatility on Friday, with Sterling struggling to stabilise amidst fresh Brexit uncertainty.

Sterling looks buoyant this morning, with GBP/EUR up slightly at €1.1529, GBP/USD up at $1.3086 and GBP/CAD also up at C$1.7176, while GBP/AUD and GBP/NZD have both slipped to AU$1.8279 and NZ$1.9033 respectively.

Centre stage this week will be Wednesday’s parliamentary debate on Brexit, with the pound potentially surging if MPs are able to successfully block a no-deal Brexit.

What’s been happening?

The pound traded in a wide range at the end of last week, initially coming under pressure after the EU’s chief negotiator, Michel Barnier, warned there was a high chance of an ‘accidental’ no-deal Brexit.

However Sterling appeared to mount a comeback towards the very end of the session, allowing the pound to break a three-week losing streak amid optimism about an imminent breakthrough in talks, despite all the evidence pointing to the contrary. 

Meanwhile the euro faced some pressure on Friday with the release of Germany’s latest Ifo business climate index, with GBP/EUR exchange rates steadying as confidence slipped to the worst levels since December 2014.

Finally, after initially weakening, the GBP/USD exchange rate bounced back on Friday afternoon following comments by Atlanta Federal Reserve President Raphael Bostic, who suggested that global trade and Brexit uncertainty were ‘clouding’ the bank’s monetary policy outlook this year.

What’s coming up?

Looking ahead, Brexit will remain in the spotlight this week, even though the Brexit vote which was scheduled to take place on Wednesday has now been postponed by two weeks.

Meanwhile, in focus for USD investors this week will be Jerome Powell's testimony in front of Congress on Tuesday, with the US dollar potentially weakening if the Fed Chair remains cautious in his outlook for monetary policy this year.

Last but not least is the euro, which could face some downward pressure this week if Eurozone business confidence it shown to have fallen again in February.

Written by
Philip McHugh

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