Brexit fuelled Sterling shoots higher
Philip McHugh February 27th 2019 - 2 minute read
The pound was propelled higher across the board yesterday as Theresa May delivered a speech in Parliament in which she said Brexit could be delayed to allow for an extension of Article 50. Markets took this to be a sign that there was more likely to be a deal, pushing Sterling markedly higher.
The pound’s momentum has continued into today, with GBP/EUR up at €1.1656, GBP/USD buoyant at $1.3275 and GBP/CAD also up at C$1.7475, while GBP/AUD and GBP/NZD are continuing to rocket higher to AU$1.8495 and NZ$1.9268 respectively.
Today will see continuing Brexit action with a vote due in the Commons on amendments to the withdrawal agreement.
What’s been happening?
In what is proving to be a slow data week, politics and geopolitical risk factors remain the driving forces in currency markets.
Yesterday saw Theresa May throw down the Brexit gauntlet in Parliament, opening up the possibility of a two month extension to Article 50 – a development that was welcomed by pound traders and caused Sterling to jump across the board – while US President Donald Trump arrived in Vietnam for talks with North Korean leader Kim Yong Un.
Federal Reserve Chair Jerome Powell testified before Congress, continuing from the session yesterday in which he described the US economy as ‘healthy’ although it was facing some ‘crosscurrents and conflicting signals’.
Perhaps partially as a result of his words the US Dollar failed to gain on the Pound yesterday, with its losses compounded by disappointing US housing starts change figures for December, which fell well below the expectation of -0.5% to -11.2%.
What’s coming up?
Today will see a raft of US data published, the most important from a currency market point of view being the nondefense capital goods orders for January.
Canadian inflation data is also due out later, with the latest Bank of Canada Consumer Price Index expected to show a slight dip at the start of 2019.
The main driver of Sterling exchange rates today is likely to remain Brexit, with the House of Commons scheduled to vote on the ‘Cooper Amendment’.