Pound stalls as EU remains undecided on Brexit extension
Philip McHugh October 28th 2019 - 2 minute read
The pound was left directionless at the end of last week as heightened Brexit and UK political uncertainty limited the appeal of the currency.
Sterling appears to be holding its ground so far this morning, with GBP/EUR flat at €1.1587, GBP/USD stable at $1.2858, and GBP/CAD buoyed at C$1.6809. GBP/AUD and GBP/NZD are holding firm, rising to AU$1.8849 and NZ$2.0256 respectively.
On the docket today is Boris Johnson’s motion calling for a general election. Will the risk of a snap election weigh on GBP exchange rates at the start of the week?
What’s been happening?
The pound traded sideways on Friday as markets were left in limbo over Brexit.
The EU had been expected to deliver its verdict on a Brexit extension at the end of last week.
However, the EU delayed its final decision until this week, paralysing Sterling as EU leaders sought more time to decide on the length of an extension in light of Westminster developments.
The euro also closed last week in a narrow range, with the single currency stabilising on Germany’s latest IFO survey, as business confidence surprised to the upside in October.
Meanwhile, the US dollar was also mostly static on Friday as the Federal Reserve’s upcoming rate decision came into focus.
The Fed is widely expected to deliver its third consecutive rate cut this week following a string of gloomy domestic data.
What’s coming up?
UK politics will be front and centre this week, potentially injecting some fresh volatility into the pound.
MPs are expected to vote today on a motion from Boris Johnson calling for a snap election before Christmas.
However, it remains unclear whether the move will be backed by Labour, with Jeremy Corbyn stating he will only back an election once a no-deal Brexit is completely ruled out.
While the Fed rate decision looks to be the highlight for USD investors this week, the will be plenty of other high-tier US data for them to sink their teeth into.
This includes the latest US GDP figures on Wednesday, which look poised to reveal economic growth slowed in the third quarter.
For EUR investors the focus will be on the Eurozone’s own GDP release. Will an expected slowdown in in the Eurozone economy exert some pressure on the euro this week?