Pound steadies amid Brexit intermission
Philip McHugh April 12th 2019 - 2 minute read
The pound showed few signs of life yesterday, with the UK currency’s recent volatility dissipating after the UK was granted a six month Brexit delay.
Sterling continues to trade in a narrow range this morning, with GBP/EUR subdued at €1.1573, GBP/USD stable at $1.3061 and GBP/CAD flat at C$1.7462, while GBP/AUD and GBP/NZD both hold steady at AU$1.8328 and NZ$1.9405 respectively.
Looking ahead, as the immediate threat of a no-deal Brexit fades we may see economic data begin to reclaim the spotlight, with a contraction in Eurozone industrial production potentially weakening the euro this morning.
What’s been happening?
The pound was left rangebound on Thursday as markets paused for breath after the risk of the UK facing a no-deal Brexit this week was eliminated after the EU granted another extension to Article 50.
While the delay until 31 October was a relief to most GBP investors, there was little sign of joy in Sterling yesterday, with GBP exchange rates mostly flat amid concerns that the UK now faces another six months of uncertainty with no clear end in sight.
This saw the GBP/EUR exchange rate remain flat throughout yesterday’s session as the euro also struggled to find support after Germany’s latest CPI figures confirmed that inflation slumped to an eleven-month low in March, underscoring fears of a prolonged slowdown in the Eurozone this year.
Meanwhile, the GBP/USD exchange rate remained subdued on Thursday amidst a modest upswing in demand for the safe-haven US dollar after the IMF warned of uncertainty in the global economy.
What’s coming up?
In focus this morning will be the publication of the Eurozone’s latest industrial production figures.
This could leave the euro on the defensive today as economists forecast the data will reveal that production contracted again in February following a strong expansion at the start of the year.
Meanwhile, the US dollar may face some pressure later this afternoon as the latest US consumer sentiment figures are expected to show a modest slide in domestic confidence in April.
Finally, the absence of any UK economic data will likely leave GBP investors focused on UK politics at the end of this week as a growing split in Parliament threatens the stability of the government.