Pound back on the defensive amid lingering no-deal Brexit fears
Philip McHugh February 27th 2020 - 2 minute read
The pound was put back on the defensive in the middle of the week, succumbing to renewed Brexit anxiety as rhetoric between the UK and EU remained combative.
Trade in Sterling remains mixed this morning, as GBP/EUR slides to €1.1808, with GBP/USD muted at $1.2913 and GBP/CAD flat at C$1.7227. GBP/AUD and GBP/NZD have both drifted lower, striking AU$1.9671 and NZ$2.0471 respectively.
Looking ahead, the pound may resume its slide today as the UK government publishes its mandate for trade negotiations with the EU next month.
What’s been happening?
The pound trended lower on Wednesday, relinquishing all of its gains from the previous session in response to fresh Brexit jitters.
As rhetoric between the UK and EU grows increasingly defiant, GBP investors remain concerned about the prospect of a no-deal Brexit at the end of 2020.
The euro was mostly rangebound through the mid-week following a speech by European Central Bank (ECB) President Christine Lagarde, who renewed her calls for Eurozone governments to support growth in the bloc through fiscal spending.
Meanwhile, the US dollar bounced back yesterday, with a sharp turnaround in US treasury bonds after Tuesday’s slump, and the ongoing coronavirus crisis spurring demand for the safe-haven currency.
What’s coming up?
In focus today will be the publication of the UK government mandate for trade negotiations with the EU.
The mandate is expected to reaffirm Boris Johnson’s vision for a free trade agreement which will not require the UK to abide by EU regulation.
This indicates a likely clash with the EU in negotiations next month as EU leaders seek to maintain a ‘level playing field’ with the UK.
In Europe the Eurozone economic sentiment figures could drag on the euro this morning if they reveal a decline in business confidence this month.
Finally, the focus for USD investors today will be on the latest US durable goods orders print. The report could undermine the US dollar later this afternoon on forecasts that order growth slumped last month.