Sterling found some long-overdue support yesterday against the US Dollar (GBP/USD) and Euro (GBP/EUR) after the EU’s chief Brexit negotiator hinted that an alternative plan for managing the Irish border may be developed.
The House of Commons has also moved to make suspending Parliament in order to push through a no-deal Brexit that much more difficult, while UK economic data impressed with better-than-expected Retail Sales data. The upshot has been widespread gains for Sterling, with both the Pound US Dollar (GBP/USD) and Pound Euro (GBP/EUR) exchange rates posting some meaningful gains. Volatility continues for the Turkish Lira (TRY), however, amid mixed messages from Washington over possible sanctions following the country’s purchase of Russian military hardware.
Pound Posts Best Day in 10 Weeks against US Dollar (GBP/USD)
The British Pound US Dollar exchange rate (GBP/USD) posted its biggest day of gains in two-and-a-half months yesterday as markets reacted to two key developments. A more conciliatory tone over the Irish border issue was seen from European politicians, while the UK revealed that the government had been defeated again in the House of Commons, making it very difficult for Parliament to be suspended in a bid to push through a no-deal Brexit. Both these factors have been sufficient to lend some much-needed support to Sterling, although sustaining these gains into next week when a new Prime Minister takes office and the government potentially faces losing a vote of no confidence could prove challenging.
Euro slips against Sterling (EUR/GBP)
Support for Sterling has been broad-based, with the Pound Euro exchange rate (GBP/EUR) pushing back to highs not seen since the start of the week. Better-than-expected UK Retail Sales data released yesterday offered further support to the currency, with the number showing that consumers still have the confidence to be spending, rather than saving amid wage increases, despite the looming Brexit uncertainty. With UK Public Sector Borrowing data due for release today, however, any notable overshoot on expectations could easily see some of the Pound’s recent gains being reversed. Yesterday’s bout of respite needs to be viewed in context of the uncertainty that lies ahead.
Why Did it Move? Pound Turkish Lira (GBP/TRY) Exchange Rate
The Turkish Lira gained ground during yesterday’s session off the back of Donald Trump’s initial comments that he wasn’t looking at applying sanctions to Turkey following its purchase of the Russian missile system. This saw the Pound – Turkish Lira exchange rate (GBP/TRY) fall almost 2% from 7.14 to just above 7.00, although a subsequent contradiction in the President’s comments has seen over half of this move being reversed already. The cross now trades at 7.08.