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Pound Avoids Losses on Rumours of 2-Year Brexit Delay
Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
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A fresh batch of Brexit rumours and speculation are helping the pound to hold near its recent highs this week so far, meaning Sterling could end February near its best levels all month.
Weak Eurozone data has made it easier for GBP/EUR to hold above the level of €1.15, with EUR/GBP floundering in the region of £0.86.
GBP/USD has returned to above the level of $1.30 and is edging closer to $1.31.
Meanwhile, US dollar weakness is making it easier for EUR/USD to recover from mid-February lows of $1.12, and the pair is trending near $1.13.
What’s been happening?
The pound has rebounded towards the end of February as speculation of a breakthrough in UK-EU negotiations and rumours that Brexit could be delayed by as much as two years bolstered hopes that a no-deal Brexit could be avoided.
This was despite news that the next Parliament vote on Brexit had been delayed until 12 March – a mere 17 days before the current Brexit date of 29 March.
Brexit hopes made it easier for the pound to register gains versus the euro, which has been weighed down by worsening signs of economic slowdown in Germany.
However, both the pound and euro have been able to climb versus the US dollar over the past week.
The US dollar is a safe haven currency, so investors have been selling it as US-China trade developments make promising developments. With trade jitters lightening, investors are more willing to take risks instead.
What do you need to look out for?
Once again, the next meaningful parliamentary vote on UK Prime Minister Theresa May’s Brexit plan has been delayed. Previously set for this week, it will now take place on 12 March.
Being so close to the formal Brexit date, the Pound will be even more sensitive to the possibility of a no-deal Brexit or rumours of a delay. This is likely to lead to pound volatility and reactions to any noteworthy Brexit news.
With the euro weighed by Eurozone growth concerns, upcoming German inflation and job market data is likely to be influential for the shared currency this week.
Now that a delay to the US-China negotiation deadline has been confirmed, risk-on movement may not rise much further and this could leave the US dollar reacting to US data.
The US dollar could see stronger demand if upcoming US factory data impresses investors or if the Federal Reserve takes a more hawkish stance in its monetary policy outlook during this week’s Congressional testimonies.
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