The Pound remains relatively stable against most major currencies despite the on-going Brexit uncertainty. This week parliament continues to debate the withdrawal agreement, with the ‘meaningful vote’ due to take place next Tuesday. However there is every chance that this vote will be delayed again for the second time.
There has also been news this morning that the EU and UK are exploring the option of extending the Article 50 period, to give all parties more time to thrash out a deal that can get through parliament.
What effect would extending Article 50 have on Sterling?
It’s very hard to know. On the one hand, you could say that this gives more time to get a deal everyone is happy with, and the Pound could rise. However all it’s really doing is kicking the can down the road again. If it looks like next weeks vote will lose by more than 50 votes, then I think Theresa May will delay it again. Currently the PM is trying to seek further concessions from the EU, in order to try and get the deal through.
The currency markets are seemingly not taking a huge amount of notice as nothing has really changed. GBP/EUR rates remain in the €1.11’s where they have been for a while. Until we get more concrete news on what is likely to happen, investors seem to be sitting on their hands. I think most of the bad news is already priced in to the value of the Pound, and that’s why we haven’t seen much movement for Sterling.
What else is affecting exchange rates?
Away from Brexit, we’ve seen slow car sales in the UK, but the news didn’t have much effect on the Pound. in the Eurozone, we’ve seen some better then expected retail sales, and later on this morning we’ll see the latest EU business climate figure. it’s expected to drop from 1.09 to 0.99, and if this is confirmed it’s likely to weaken the Euro slightly that could help GBP/EUR rise.
Elsewhere we have US trade balance figures and trade data from Canada.
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