The British pound rose against its major rivals on Tuesday, due to a wave of Brexit optimism that overshadowed the markets, but it quickly fell later throughout the day due to conflicting signs coming from the European Union.
The EU’s chief negotiator, Michel Barnier, said the EU was ready to offer a partnership with Britain, but ended up deadlocked.
The GBP/EUR pair dropped 0.25% to trade at 1.1130 Euro per GBP. Meanwhile, GBP/CAD rose, trading at $1.6931, and GBP/AUD rose to $1.7942. GBP/NZD was not affected, as the pair traded at $1.9554.
The various movements that the pound saw today are largely due to the political developments related to Brexit. This has left traders in doubt as to whether there would be a deal before the UK leaves the EU.
The Canadian dollar was able to take advantage of the pound’s weakness after the release of Canadian GDP figures, which revealed that the economy grew by 0.7% in the second quarter.
The US dollar also benefited from some positive data, but was unable to maintain its strength against the pound. Core personal consumption slowed a slight rise in July, from 1.9% to 2% with some support from jobless claims.
In the UK, some disappointing figures indicated a slowdown in consumer confidence in the economy, with net lending to individuals in July reaching 4 billion pounds, lower than the expected figure of 5.5 billion pounds.
In the emerging currency market, the pound gained 4.5% against the Turkish lira and 2.5% against the South African rand.
Expectations of analysts and experts
The Pound is likely to see further pressure tomorrow morning when the latest Consumer Confidence survey is published. Economists currently believe that sentiment will remain at a low of -12 points, dropping more than the previous result at -10. Since 1981, the average consumer confidence score was -9.97, with a low of -39 in July 2008.