Pound buoyed as Brexit volatility pauses

The pound held its ground on Friday as GBP investor took stock of the week’s events and what a six-month delay could mean for Brexit.

Sterling remains robust at the start of this week as well, with GBP/EUR stable at €1.1573, GBP/USD buoyed at $1.3101 and GBP/CAD edging higher to C$1.7458, while GBP/AUD and GBP/NZD both hold steady at AU$1.8255 and NZ$1.9338 respectively.

Looking ahead, the release of the latest New York manufacturing index may help to boost the US dollar today if activity in the factory sector accelerated in line with expectations.

What’s been happening?

The pound closed last week’s session on a solid footing, avoiding the dramatic swings in movement that have marred the UK currency in recent weeks as Brexit volatility continued to dissipate.   

Also helping to buoy Sterling on Friday were optimistic comments from Chancellor Philip Hammond, who suggested the UK was set to receive a significant boost in investment once Brexit is resolved.

This helped the GBP/EUR exchange rate claw back its initial losses, after the pairing was driven to a three-week low early on in the session after the euro was buoyed by the Eurozone’s better-than-expected industrial production figures from February.

Meanwhile, the GBP/USD exchange rate shot higher at the end of last week, climbing around half a cent throughout Friday’s session as the US dollar was undermined by a broad lift in market risk appetite as well a weaker-than-expected US consumer confidence reading.

What’s coming up?

In terms of data, the only economic release of note today will be the New York Empire State Manufacturing Index later this afternoon.

This may help the US dollar to get off to a steady start if manufacturing growth accelerated as forecast in April.
Meanwhile, we may see the pound start to be influenced by UK economic data again this week now that the immediate risk of a no-deal Brexit has cleared.

Sterling could furthermore be boosted over the first half of the week as economists forecast Tuesday’s labour figures will reveal that UK wage growth accelerated in February.

Finally, in the absence of any Eurozone data today, the euro may struggle to find any catalyst for movement, potentially leaving it vulnerable to its peers.