Pound in limbo as Brexit uncertainty looms again
3 May, 2018
Yesterday was a quiet day in the way of UK data, although it did offer a small glimpse of positivity for the Pound amidst what has been a torrid few weeks.
PMI construction data in the morning came in slightly better than expected, up to 52.5 from a predicted reading of 50.5. Eurozone GDP and unemployment came in as expected to leave the Euro relatively flat, and as a result, the Pound was able to claw back around half a cent against the single currency – welcomed by many given its over 2 cent drop from the recent highs. Against the USD the Pound also gained around half a cent by midday, however, by the European close those gains had been lost as markets and traders awaited the evening announcement from the Federal reserve- their interest rate decision and monetary policy statement. The Federal Reserve announced they would hold rates at the current level of 1.75% but suggested that with inflation now close to 2%, they were still on course their next rate hike in June. However, with US rate hikes largely priced into the market little movement was seen in USD rates.
For the Pound it seems at present it is in a state of limbo, struggling against the USD losing over 6 cents in the last 10 days, and still fighting within the same range against the Euro we have seen now for 12 months.
Today is quiet for UK data, with only Markit services PMI at 09.30, so might we see further losses for the Pound or will it mount a comeback?
It is Euro data takes centre stage with inflation data at 10.00, whilst the US does pose some data of note in the way non-farm productivity and jobless claims, ahead of its major release of Non-Farm payrolls on Friday. So, given the Pound is relatively silent this week, movements will largely depend on ecostat results from elsewhere. With reports in the media of parliamentary unrest surrounding Brexit and the Customs union have left the Pound vulnerable again, and whilst this uncertainty plays on, it is possible the Pound cold slip further.
If you have any upcoming requirements for Currency speak to your CI broker today for some friendly and professional guidance to try and avoid getting caught out with a costly movement in rates.
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