The British Pound hit a 21-month high against the Euro (GBP/EUR) today, hitting levels of 1.1643, the strongest exchange rate since May 2017. Meanwhile, Sterling reached a four-month high against the US Dollar (GBP/USD), as the British currency rallied on news that Brexit could be delayed.
Update: Wednesday’s Focus for British Pound lies in Withdrawal Agreement Amendments
The Pound exchange rate could be in for some more volatility today depending on how the UK parliament votes on withdrawal agreement amendments. GBP/USD has hit five-month highs of 1.3288 yesterday, as the possibility of an Article 50 extension came to light. However, the most crucial vote will take place on the 12th March when the second meaningful vote takes place. US Factory Orders data will be out today creating some USD exchange rate movement, as well as Federal Reserve Chief Jerome Powell being due to speak.
Labour Backs Second Referendum, Boosting British Pound
Yesterday, Labour leader Jeremy Corbyn said the party would back a second referendum in a bid to prevent a no-deal Brexit. Corbyn told his MPs that May was ‘recklessly running down the clock’ in a bid to ‘force MPs to choose between her botched deal and a disastrous no deal.’
Today, Theresa May has made three commitments. The Prime Minister has vowed to hold a meaningful vote by the 12th March. She’s also said that should there be no deal in place by then, that MPs would be given a vote on the 13th March as to whether the UK leaves with no deal. If a no-deal Brexit is rejected, the 14th March will present MPs with another opportunity, this time to extend Article 50.
The British Pound has been rallying across the board, climbing by around 1.0% against a host of other currency majors on the news.
Carney Speaks on Extension, British Pound Exchange Rate Hits Highs
Meanwhile, Bank of England (BoE) Governor Mark Carney has appeared before the Treasury Select Committee today. The central bank mogul said that the BoE was preparing to put more liquidity into the UK’s financial system if it’s deemed necessary, as part of ‘normal contingency planning’.
Carney also warned of the economic damage of Brexit, and how an extension may not bode well for the British economy.
Carney said: ‘There’s a big difference between an extension of Article 50, even a long extension, and an agreement with a transition to a known end stage. Wherever we’re headed, it would serve the economy well to have a transition period to that new world, so that people knew soon where they’re headed, businesses could reorganise their affairs and get ready for this new world, and government could finish its tasks.’
Tomorrow will see the release of the British Retail Consortium’s (BRC) Shop Price Index for February, which may offer the Pound some small direction. However, the British currency is more likely to remain sensitive to Brexit developments than economic data in the near future.