Sterling capitalised on gains made earlier in the week following the diminishing likelihood of the UK leaving the bloc without a deal. Investors’ saw the chance of a disorderly exit from the EU fall and the probability of a delay to the UK’s departure rise, after Theresa May gave lawmakers the opportunity to vote in a couple of weeks’ time to delay Britain’s divorce. With the majority of those set to vote opposed to a no-deal scenario, the prospect of being able to postpone the UK’s exit has settled many and the pound reacted accordingly. Sterling surged to a an almost 2-year high from 1.15 on Monday, through the 1.16 level and now sits close to 1.17 versus the euro. Against the dollar it was the same story, with the pound starting the week in the mid 1.30’s before rallying to above 1.33 where it trades at the moment. Traders still remain wary over exactly when Britain will cut its ties, however the PM’s comments this week have injected a degree of certainty that the pound has been searching for of late.
The dollar was also pushed lower by domestic influences in the form of comments from the Federal Reserves’ Chairman, Jerome Powell. On Tuesday Mr Powell reiterated remarks he made previously, stating the central bank would remain patient on any monetary policy changes and that there was little chance that interest rates would be hiked anytime soon. The dollar slid, with EURUSD moving back towards 1.14.
Today’s Key Events
This afternoon, Canada will release its latest CPI figures with the reading expected to show an improvement from the previous number.
The US will then be in the spotlight later in the afternoon when Fed Chair Powell testifies on the semi-annual monetary policy report at 15:00.
Voting will also take place later today in UK parliament when lawmakers express their views on a number of amendments to the PM’s proposed deal. Voting on the chosen amendments will take place at 19:00.