Yesterday was truly a day of two halves for Sterling, with Pound to Euro and Pound to Dollar exchange rates reaching two week lows before rising once more nearer to some of the attractive highs recorded this month.
Initially poor housing and retail sales figures for the UK economy painted the picture of an incredibly slow beginning to the year for the UK economy.
Expectations for growth in house prices, a strong measure for the health of any economy, were slashed from around 6% closer to the 2% mark. Whilst much of this loss is noted in the higher end of the property ladder, the net fall in prices last month of -0.9% was enough to spook some value out of the Pound to begin the day, with GBP/EUR, GBP/USD and GBP/AUD recording whole cent losses.
Yet a turnaround did occur, and once more, the macro politics of the Brexit, and the perceived far-reaching ramifications of this by financial markets, became the dominant narrative governing Pound exchange rates.
The Bill to allow the Government to enact Article 50 went through its second reading in the Commons, and concessions had to be made to avoid ‘amendments’ being added to the bill. With David Jones, Minister of State at the Department for Exiting the European Union, saying that MP’s will be allowed a ‘take it or leave it’ vote on any deal reached with the European Union.
This extra Parliamentary oversight, as we have seen numerous times in the past, has benefited Sterling holders, with Pound to Euro and Pound to Australian/New Zealand Dollar buyers being the main winners on the currency markets.
Today Prime Minister’s Questions will see whether Theresa May provides further concessions after failing to deliver on last week’s ‘white paper’ promise, and her choice of words will be the key market mover today, with almost no economic data to be released.
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