Sterling recovers on deadline extension

22 March, 2019

The EU has given UK Prime Minister Theresa May a final chance to pass her Brexit deal. She was offered a Brexit delay until May 22 under the condition of MPs approving the withdrawal deal. If no decision is taken by April 12, the remaining options will be a no-deal Brexit, a long extension, or revoking Article 50 according to European Council President Donald Tusk. The deadline extension provided a boost to Sterling, which recovered more than 100 pips from yesterday’s lows.

Despite the chances of exiting without a deal having risen significantly, traders do not believe that this is the base case scenario. Sterling remains the top performing major currency in 2019 and has been stuck in the range of 1.3 – 1.33 against the USD in March. The UK parliament may no longer kick the can further and should come up with a decision before April 12. This is likely to lead to volatile moves in the Pound, but it’s difficult to bet on one direction. 

The Bank of England remained in a “wait and see” mode at yesterday’s monetary policy meeting. The MPC voted unanimously to keep interest rates at 0.75%, but Sterling benefited slightly as the central bank held the option of a gradual limited tightening in policy. However, all that matters now is what happens over the next two weeks. If chances of a no-Brexit deal increase, expect Sterling to trade significantly below 1.30.

The Dollar has little movement on Friday morning after a strong rebound yesterday. After dipping below the 200-days moving average, the DXY index recouped all losses from Wednesday’s session to trade near 96.4. While the steep declines in US Treasury Yields are not supportive to the US currency, bond yields elsewhere are also falling with the 10-Year German Bund Yields getting closer to 0%. The Greenback also received some support from better-than-expected data on Thursday with initial jobless claims, Philly Fed manufacturing survey and leading indicators all beating estimates. 

The Euro will be in play today with a raft of key manufacturing and services PMI releases. German manufacturing PMI is likely to have the biggest impact on the single currency given the recent disappointment in manufacturing activity from the Euro’s largest economy.

Source link   Presented by FXTM

GBP/USD has one more resistance line

GBP/USD is trading in the mid 1.28s after Nigel Farage's Brexit Party boosted Prime Minister Boris Johnson's chances of winning. How high can cable climb?

Pound tumbles as Johnson seeks December 12 Election

Sterling fell out of favour with investors on Thursday after U.K Prime Minister Boris Johnson called for a general election on...

Pound's pullback creates buying opportunity

The British pound rally over the last week came to an abrupt end after a mixed day in the British parliament yesterday which still left many questions...

Pound shoots higher despite Brexit drama

The British Pound was in high demand on Monday despite UK lawmakers delaying a crucial Brexit vote over the weekend. Markets...

GBPUSD headed for 1.30 after UK

The Pound soared towards the 1.30 level against the US Dollar, after UK Prime Minister Boris Johnson and European Commission President...

Pound steady as Brexit negotiators race to meet deadline

The Pound is gaining against the US Dollar, amid reports that Brexit negotiators are rushing to try and meet a midnight...

Sterling Rises on Brexit Plan Release

A sea of red in US stocks yesterday after the US reported weak PMI data. The Dow Jones Industrial Average declined by 343 points while the Nasdaq...

GBP/USD pair fell by more than 1.2%

Yesterday, the GBP/USD pair fell by more than 1.2% amid Brexit uncertainty. The chances of next UK elections grow, so the bilateral agreement will...

UK Supreme Court rules parliament shutdown unlawful

Boris Johnson was dealt a heavy blow on Tuesday after the Supreme Court ruled his suspension of Parliament "unlawful, void and to no effect".


Share it on:   or