The pound has seen steady gains over the last week, reaching a two-week high. The rise comes as comments from Prime Minister Theresa May signalled progression in Brexit discussions between her Conservative party and opposing Labour party. Investors taking the comments as a positive towards breaking the Brexit deadlock drove the pound to a high of 1.1669 against the euro and 1.3079 against the US dollar.
The Bank of England’s policy meeting takes place today, starting at mid-day. It is widely accepted there will be no interest rate hike until early 2020 when there is more clarity on the full impact of Brexit on the economy. Depending on comments from governor Mark Carney during the accompanying press conference the pound could experience some volatility, with a hawkish tone lending strength to the pound.
The US dollar has made a recovery following some losses caused by a sharp retreat in the ISM manufacturing PMI released yesterday. Comments from Fed chair Jerome Powell during the FOMC press conference yesterday reassured the markets and triggered the resurgence. This morning manufacturing PMI’s were released from a handful of Eurozone countries with most coming in ahead of forecast. The final manufacturing figure was released at 47.9 against a target of 47.8 for April.