The pound rallied on Tuesday as Theresa May’s call for another Brexit delay and hopes of a possible compromise being reached with parliament helped to send the UK currency higher.
Sterling remains on the offensive this morning, with GBP/EUR edging up to €1.1740, GBP/USD rallying to $1.3180, while GBP/CAD climbs to C$1.7544 and GBP/NZD holds steady at and NZ$1.9440. Only GBP/AUD is on the back foot so far today, with the pairing dipping to AU$1.8537.
While Brexit will likely remain the focus for GBP investors today, watch for the UK’s latest services PMI potentially dragging on the pound if service sector activity slowed as expected in March…
What’s been happening?
pound shot higher yesterday, accelerating sharply in the evening after Theresa May announced she would seek another Brexit extension from the EU, in order to hold talks with Jeremy Corbyn in an effort to find a workable Brexit solution.
Sterling did struggle ahead of the announcement however as the UK’s latest construction PMI revealed the sector contracted for a second consecutive month in March.
Whilst dominated mostly by Brexit, the GBP/EUR exchange rate was also influenced by the release of the Eurozone’s latest PPI figures on Tuesday, with a slowing of producer price growth limiting the appeal of the euro.
Meanwhile, aiding the upswing in the GBP/USD exchange rate were the latest US durable goods figures, as a sharp contraction in good orders in February pressured the US dollar.
What’s coming up?
Outside of Brexit we will also have the release of the UK’s final PMI reading for March, with Sterling potentially facing headwinds if the UK’s dominant service sector is shown to have slowed again last month.
Meanwhile, the euro may also come under fire this morning with the publication of the Eurozone’s retail sales figures as economists forecast sales growth will have slowed from 1.3% to just 0.2% in February.
Finally, the US dollar is likely to be impacted by the latest ISM non-manufacturing PMI, with USD likely to remain in vogue if activity in the US service sector remained robust in March as forecast.
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