Pound euro soars on Brexit Optimism and abysmal Eurozone PMIs
Philip McHugh March 25th 2019 - 2 minute read
The pound shot higher at the end of last week’s session, particularly against the euro, where renewed Brexit optimism and a particularly worrying Eurozone PMI reading sent the pairing surging over a cent and a half.
Sterling opens this week more subdued however, with GBP/EUR flat at €1.1670, GBP/USD muted at $1.3186 and GBP/CAD stable at C$1.7696, while GBP/AUD and GBP/NZD both hold steady at AU$1.8611 and NZ$1.9168 respectively.
Brexit news is set to revive volatility in the pound this week, as markets brace for a third vote on Theresa May’s Brexit deal.
What’s been happening?
The pound was the big winner on Friday, mounting a sizable comeback against the majority of its peers amidst renewed Brexit optimism.
This came as a result of the EU’s agreement to delay Brexit beyond 29 March, reigniting hopes that the UK will be able to avoid a no-deal Brexit.
The most notable surge in Sterling was seen against the euro, with the GBP/EUR exchange rate climbing over 1% through Friday’s session.
This came in the wake of the Eurozone’s PMI figures for March, which revealed growth in the bloc’s manufacturing sector contracted at its fastest pace since April 2013, knocking confidence in the euro.
Meanwhile, the gains in the GBP/USD exchange rate at the end of last week were capped by the release of the latest US housing figures, with the US dollar finding support following an 11.8% surge in existing US home sales in February.
What’s coming up?
Looking ahead, expect to see the pound experience further volatility this week as the government holds a third vote on Theresa May’s Brexit deal.
GBP investors aren’t holding out much hope for MPs passing the deal however, likely resulting in Sterling being met by some wild swings as it leaves the UK with a little over two weeks to come up with an alternative plan or face a possible no-deal Brexit.
Meanwhile, the start of this week’s session will see the release of Germany’s latest business climate index, with another fall in sentiment likely to drag on the euro this morning.
Finally, the US dollar may climb later this afternoon if the Dallas Fed manufacturing index reports a similar rise in activity to last week’s Philadelphia index.