The Pound saw an immediate boost yesterday as the House of Commons rejected the Brexit amendment that would enable the Government back to the drawing board in the event that they aren't happy with the Brexit deal reached with the EU. The Sterling report below discussses why this offered support for the Pound against the Euro and US Dollar. The table below shows the difference in a number of currencies you could have acheived when buying £200,000.00 at the high and low points during the past week.
|Currency Pair||% Change||Difference on £200,000|
Yesterday afternoon saw UK Prime Minister Theresa May narrowly avoid a bruising parliamentary defeat to her Brexit strategy.
MPs voted by a 26 majority to reject a House of Lords amendment to the Brexit bill, that would have given lawmakers the power to send the government back to the negotiating table with Brussels if they didn’t agree with the terms of the Brexit deal struck with the EU.
The vote was held just hours after Justice Minister Phillip Lee, who voted in Britain's 2016 referendum to remain in the European Union, resigned so he could vote against the government on the measure but in fact didn’t end up voting at all.
There was an immediate positive response from Sterling following the vote, which saw rates with the EUR of almost 1.14 and gains against the USD of almost 1 cent, reaching 1.34.
The result was a major win for government in the wake of another important vote today that will see MPs vote on an amendment seeking to keep Britain in a customs union with the EU.
The gains made by Sterling during yesterday’s trading was also attributed to the positive economic data surrounding unemployment and average earnings.
UK unemployment remained at 4.2% for the 1st quarter, which is surprisingly in line with its lowest level since 1975. In addition to this, average weekly earnings rose by 2.5% during the period, which is down from 2.6% in March, but this was in line with economist expectations.
These data releases are important to currency markets due to the influence that changes can have on inflation, since lower unemployment and faster wage growth means greater demand within an economy and leading to an increase in inflation.
The levels of inflation are a key indicator which will affect the decision to either raise or reduce interest rates by the Bank of England.
Today, inflation data is released at 9:30, in the form of the Consumer Price Index (CPI) and is expected to either remain at 2.5% or see a slight drop of 0.1%.
If this is the outcome the chances of an interest rate hike in the coming months will be reduced and It would therefore be unlikely that Sterling will see any major gains in the short term, therefore clients looking to sell sterling could benefit by acting sooner rather than later.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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