The British pound was able to secure some gains after the end of trading sessions on Tuesday, amid cautious optimism about Brexit. The British Prime Minister Theresa May has met with leaders of the European Union in an attempt to save the Brexit deal.
The British pound continued to rise during early morning trading after news that May would face a no-confidence vote later in the day. The GBP / EUR pair rose to €1.1064. The GBP / USD also rose to $1.2526. The gains also boosted the GBP / CAD and GBP / AUD pair at 1.6756 Canadian dollars and AU$ 1.7368 respectively. GBP/NZD also rose, to reach the price of NZ $1.8255.
The British pound initially recovered on Tuesday after the shocks on Monday, amid hopes that Theresa May could get some last-minute concessions in her Brexit deal, as she met with a number of EU leaders and officials.
Another factor that backed the pound was the release of the latest employment figures in the UK. UK wage growth hit a 10-year high in October, boosting speculation that the Bank of England will raise interest rates in the new year as long as the government is able to clarify some uncertainties regarding the Brexit deal.
After struggling to make any progress in the first half of yesterday’s session, the GBP / EUR exchange rate managed to rise in the afternoon, as the EUR was undermined by Italy’s new budget problems.
Meanwhile, the GBP / USD found some temporary gains on Tuesday after reports emerged that Beijing was preparing to cut tariffs on US cars, reducing demand for safe-haven currencies such as the US dollar.
Later today the latest figures of the US consumer price index will be released, and the USD might decline in the event that inflation slowed last month as expected.
Finally, with the news that Theresa May is likely to receive a no confidence vote later this evening could pose significant risks to the British currency. In the meantime, the US dollar may see some action as markets prepare for the latest US consumer price index.
The expected drop in US inflation in November is likely to be slightly reflected on the US dollar this afternoon, as it is likely to be seen as further strengthening the Federal Reserve’s stance to stop raising interest rates next year.