The pound dropped to multi month lows across the board yesterday, including a 20-month low versus the dollar, after Theresa May postponed the parliamentary vote on her Brexit deal. The vote was set for yesterday to determine whether the Brexit deal that is currently on the table would be accepted or rejected by the Prime Ministers peers. May realised that the deal had no chance of being accepted in parliament and pulled the plug on the vote so that she can try to negotiate more concessions on the Irish border. The pound acted accordingly and fell across the board throughout the day as this now leaves the door open for a whole host of potentially hazardous and uncertain scenarios. The chances of a no deal have now greatly increased, as has the potential for another EU referendum, all causing a huge cloud of uncertainty over the UK and the pound.
Gains for some of the major currencies were limited, however, as other events across the globe affected their local currencies. The Euro was held back by protests in France against Emmanuel Macrons controversial reforms and the greenback is being held back by the chances of a slow down in interest rate hikes from the Fed, although in this time of great global uncertainty the dollar has benefitted from safe haven flows.
Today’s key data releases
Brexit will of course remain the key market mover throughout the week for Sterling but the Average Earnings Index and Unemployment Rate out of the UK this morning both have the potential to move GBP crosses. Both releases are expected to remain at the same level as the previous reading, but should this deviate from the anticipated level then expect heightened volatility.
Over in the Eurozone the German ZEW Economic Sentiment data will be released. This is a leading indicator of economic health and with Germany being the Eurozone's largest economy could play a key part in Euro movement today.
Across the pond in the US they will be releasing their Producer Price Index (PPI) figures, which shows the cost of goods sold by producers. This is a key gauge of consumer inflation and will be the key release for the dollar today.