The Pound has recovered slightly this morning, and currently sits around €1.1325 vs the Euro and $1.30 vs the US Dollar. It seems that May has insisted that there will be no hard border in Ireland and has also pointed out that 95% of the Brexit withdrawal agreement is now signed off and agreed. For the moment that seems to have satisfied the rebels in the conservative party, and that’s helped support the Pound.
Pound/Euro stabilises after falling to 2 week low
Yesterday Sterling/Euro hit its lowest levels in 2 weeks, and this is largely down to what has happened in the last week with regards to the EU/UK negotiations. This is a fluid situation and will continue to drive the direction of the Pound for the next month at least.
Elsewhere today the EU will decide whether to reject Italy’s budget. I talked about this issue in a recent post, and the Italy problem has helped to weaken the Euro recently, which has contributed to the GBP/EUR rate remaining supported. The European Council will report on their budget at 2pm, and if they reject it then the Euro would likely weaken which could send the GBP/EUR rate a little higher this afternoon. Any gains are likely to be limited however due to the continued uncertainty about Brexit.
Pound/Dollar also drops due to safe haven USD strength
Pound/US Dollar rates dipped below $1.30 yesterday and this was largely down to a stronger US Dollar. Uncertainty in the UK and Italy increased demand for the safe haven US Dollar, pushing GBP/USD lower as the Dollar increased in value. When the Euro weakens we often see the USD strengthen due to its inverse relationship, so if the Italian budget is voted down this afternoon, it could cause a further drop in GBP/USD.
What else could move exchange rates today?
Elsewhere today we have some speeches by the BoE governor Mark Carney, and also a speech by their chief economist Haldane. Any hawkish comments from Haldane could help the Pound, but this will probably be balanced out by Carney who is not known for his optimism surrounding the UK economy.
That’s it for this morning. Remember if you are looking to achieve the best exchange rates for any major currency, then contact us today to see what rate we can offer you.