The British pound remains under pressure against major currencies on Thursday amid uncertainties over Britain’s exit agreement from the European Union. The GBP was still trading in a narrow range against other currencies.
Major GBP currency pairs either remained stable or dropped slightly. GBP/USD stabilized at 1.1212 per pound, and the GBP / USD and GBP / CAD pairs settled at $1.2788 and CAD1.6922 respectively. Meanwhile, AUD / NZD and GBP / NZD are attempting to bounce back from yesterday’s losses, hitting $1.7656 and NZ $1.8824 respectively.
Further difficulties in attracting sterling investors came after the public borrowing figures in the UK, which revealed the deficit inflation in October. However, the eurozone’s single currency may also be heading down, especially after the release of consumer confidence reports that came in below expectations, leading to weak consumer sentiment and lower purchasing power.
What happens behind the scenes of the Brexit talks?
British Prime Minister Theresa May had a meeting with the President of the European Commission in Brussels yesterday, to finalize the agreements on the future relationship between the United Kingdom and the European Union. The move has had a positive impact on the pound keeping its defensive stance against other major currencies.
In the meantime, the EU’s decision on Italy’s budget for 2019 was a major driver of the GBP / EUR exchange rate movements. The European Commission believes that Italy has seriously violated the EU’s financial rules and will therefore apply disciplinary measures.
However, the GBP / USD remained stable on Thursday as the US durable goods orders contracted contracted more than expected in October. This has led to doubts towards the US dollar amid investors.
What is expected to happen next?
The effects of Brexit will most likely dominate the movements and prices of the British pound, while the UK economic data should remain calm for the rest of the week. We may see a new fall in the pound if any new complications emerge in the final Brexit talks ahead of the EU leaders’ summit on Sunday.
At the same time, we may see some negative moves in the Euro as well, especially with expectations of a drop in the European consumer confidence index in November due to uncertainty about the Brexit and the Italian financial crisis.
In the US, the dollar may see some gains due to the closing of US markets for the Thanksgiving holiday, which might lead to lower trading volumes.
Be the first to comment