GBP prices fell on Friday, especially as British Prime Minister Theresa May failed to get assurances from the EU regarding the Irish backstop agreement.
GBP prices settled during the early trading hours of Monday’s session, however, with GBP / EUR flat at 1.1130, while GBP / USD remained at $1.2594 per pound. However, the GBP / CAD remained unchanged remained at CAD 1.6851, while GBP / AUD climbed to AU$1.7559 and GBP / NZD remained flat at NZ$ 1.8512.
Markets are awaiting this week the minutes from the BoE and Fed meetings, with both central banks holding their final monetary policy meetings this year.
The British pound fell at the end of last week after Theresa May’s efforts to save the Brexit deal were hit by a blow from the European Union after European leaders rejected their proposals for “legal assurances” on the Irish backstop proposal. After the EU summit in Brussels late on Thursday, European Commission President Jean-Claude Juncker called May’s proposals “nebulous and imprecise”, disappointing investors who were optimistic about seeing some progress.
The GBP avoided recording any losses against the euro, with the GBP / EUR exchange rate was bound during the trading session on Friday, as the latest Eurozone PMI data was released, revealing that business growth in the region slowed to a four-year low in December.
At the same time, the GBP / USD fell at the end of last week’s session with the pair dropping 0.8%, as disappointing Chinese economic data prompted some investors to turn to the safe haven US dollar.
In the upcoming period – this week, the focus will be on the latest interest rate decisions by the Bank of England and the Federal Reserve. The Federal Reserve is expected to raise interest rates, but the prospect of a weakening US dollar could pause them sometime in 2019.
Meanwhile, the Bank of England will wrap up its monetary policy meeting on Thursday, which could give the pound some temporary relief if it appears positive towards higher interest rates next year. However, in the near future, the latest Eurozone CPI data will be released, and the euro is likely to fall if it will show that activity continued to slow in the fourth quarter.