Overnight, Theresa May announced that she’d managed to secure ‘legally binding changes’ to her Brexit deal which will be voted on today in parliament. It was largely expected that her deal would fall at the first hurdle, resulting in a vote on whether the UK goes through with a no-deal Brexit tomorrow, and another vote to extend Article 50 on Thursday.
British Pound Exchange Rate Surges on Theresa May’s Apparent Progress
However, May has reportedly made changes that meet demands on the sticking point of negotiations, the Irish backstop. Now, MPs have limited time to review the deal and its new changes before they have to vote on it. Meanwhile, Chief EU negotiator Jean-Claude Juncker has said: ‘It is this deal, or Brexit may not happen at all.’
In response to the Brexit developments, the Pound rallied as markets perceived progress. The British Pound attained levels above 1.32 against the US Dollar for the first time in a week. The British Pound to US Dollar exchange rate is now trending in the region of 1.3235. The British Pound to Euro (GBP/EUR) exchange rate is trading at levels of 1.1749.
Theresa May’s new assurances on the deal should prevent the UK becoming ‘trapped’ in a customs union–something she’s hoping will win her deal support. To be successful, the British Prime Minister needs support from over 100 Tory Eurosceptics who voted against her deal at the start of the year, not to mention backing from the Democratic Unionist Party which props up her government.
However, some of Theresa May’s opposition has been very vocal already about the supposedly improved withdrawal agreement.
“The prime minister has refused to change her red lines at all.”
— Sky News Politics (@SkyNewsPolitics) March 12, 2019
Labour’s Sir Keir Starmer has suggested May hasn’t considered ‘anything the opposition has said’ and that the revised deal is essentially the same.
British Pound Exchange Rate Forecast Today
Any signs that Theresa May’s leadership could be in danger could put pressure on the Pound. Sterling may be contending with politics at the moment, but there’s also economic data due out today which could impact the British Pound’s value. Trade Balance data, and Gross Domestic Product (GDP) data detailing the level of economic growth in the UK will be revealed this morning. Additionally, Industrial Production, Manufacturing Production, and Construction Output numbers will also be out and could influence the British Pound exchange rate somewhat.
Update: Economic growth came in at 0.3% in the three months through January, while the month of January alone showed a more robust 0.5% rebound. However, the Pound is falling ahead of today’s key vote.
January's 0.5% m/m jump in U.K. GDP beat even our top-of-the-range 0.4% forecast and supports our view consumers will carry the economy over the line in Q1. Note services output up a healthy 0.5% q/q/ in Jan, matching post-ref average. pic.twitter.com/PW4Z0Wmhxv
— Samuel Tombs (@samueltombs) March 12, 2019