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The Prime Minister has announced that she will hold a further vote on Brexit this June, no matter whether the cross-party talks have resulted in an agreement or not. Sterling hit a two-week low yesterday, not helped by poor UK labour data.
Meanwhile, the euro had a difficult day yesterday as economic figures came in much below expectations, but made a recovery this morning on the back of more positive GDP growth stats.
The dollar is stronger against the pound and euro today, after hopes were raised for a positive outcome to US-China trade talks – and the Federal Reserve played down the likelihood of interest cuts.
The outcome of Brexit remains uncertain and the pound is volatile as a result. Call your Business Trader on 020 7898 0500 to find out how to lock in your exchange rate for up to two years with a forward contract.
GBP: Pound choppy as PM calls for another vote on Brexit deal
Theresa May has announced that she will be holding another vote on the Brexit implementation bill for MPs in June. This will go ahead regardless of whether an agreement has been reached between the Government and the Labour party. It will also be the fourth time that she has asked MPs to vote on the kind of Brexit that they want. The pound is choppy today as a result.
Sterling hit a two week low yesterday as UK labour data was released, showing that wage growth at the end of March was lower than expected. Wages had slowed to 3.2% which fell short of the 3.4% prediction. It also showed a significant drop for the previous reading of 3.5%.
This reading could signal broader issues for the wider economy. Analysts have also said that any further data showing drops in wage growth and employment numbers could be a sign that Brexit uncertainty has hurt businesses.
EUR: Euro regains ground after poor economic releases
The euro regained ground this morning after stats showed a better-than-expected growth rate for the German economy. This followed an unexpected turn, as both Eurozone and German economic sentiment fell quite a way below expectations. German figures went from a 13-month high of 3.1 to -2.1 – against market forecasts of 5. The markets were also expecting a figure of 5 points for Eurozone sentiment, but that, too, dropped to -1.6. Euro weakened slightly against the pound on the news, although Brexit uncertainty still helped to hold sterling down.
Industrial production in March fell by 0.3%, following similar declines in February. It seems that, despite recent positivity, the eurozone is not entirely out of the woods yet. It is not unreasonable to expect further volatility over the next few weeks – especially combined with Brexit pushing euro in the opposite direction against the pound.
USD: Dollar strong as Fed plays down interest rate cuts
The dollar has strengthened this morning against most major currencies, due to comments from senior Federal Reserve officials that have played down the likelihood of interest rate cuts.
US-China trade talks continue to govern the dollar, which made gains against both the pound and the euro yesterday afternoon. This may have happened on the back of comments from Trump, who expressed his thoughts on the negotiations, saying that he has “a feeling it’s going to be very successful”.
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