Pound Sterling (GBP) Exchange Rates Undermined by UK Political Uncertainty
The Pound (GBP) was hit by heavy selling at the start of this week’s session, with investors spooked by suggestions that Theresa May could face a vote of no confidence by the end of the week.
Theresa May's future is in increasing danger at home as she closes in on a Brexit deal https://t.co/WtyCYYhVvb
— Bloomberg UK (@BloombergUK) October 22, 2018
This selling pressure was then accentuated by reports that the DUP would back as amendment to block the possibility of a backstop agreement with the EU over the Irish Border, potentially backing the PM into a corner when it comes to Brexit negotiations.
These political headwinds are likely to maintain the pressure on Sterling through Tuesday’s session as well, likely removing any chance of there being a rally should the recent upswing in wage growth lead to a more hawkish outlook from Bank of England (BoE) governor Mark Carney when he speaks later this afternoon.
GBP/EUR Exchange Rate Slides despite Italy Concerns
While the Pound Euro (GBP/EUR) exchange rate may have fallen roughly half a cent on Monday, EUR struggled to replicate its performance against the rest of its peers as concerns over Italy continued to drag on sentiment.
This came as it became increasingly clear that Italy’s dispute with the EU over its draft budget was far from over, despite Prime Minister Giuseppe Conte stating he was open to talks with EU leaders over their concerns.
Alongside this backdrop of uncertainty EUR investors will be bracing for the possibility of further weakness later this afternoon, with economists forecasting Eurozone confidence will have slid once again in October.
GBP/USD Exchange Rate Tumbles as Safe-Haven Demand Soars
The Pound US Dollar (GBP/USD) exchange rate fell below $1.30 for the first time in two-weeks on Monday as concerns over Brexit and Italy’s budget accelerated demand for USD.
Looking ahead the focus for USD investors may return to monetary policy today, with speeches from a number of Federal Reserve policymakers potentially strengthening the US Dollar if they echo the hawkish tone struck by the latest Fed minutes.
GBP/CAD Exchange Rate Slumps Ahead of BoC Meeting
The Pound Canadian Dollar (GBP/CAD) exchange rate relinquished all of Friday’s gains during yesterday’s session, tumbling over a cent as markets remained confident that the Bank of Canada (BoC) will deliver a rate hike this week, despite last week’s inflation miss.
GBP/AUD Exchange Rate Rebounds from Lows as Risk Appetite Slides
The Pound Australian Dollar (GBP/AUD) exchange rate initially tumbled during yesterday’s session as Brexit uncertainty battered Sterling sentiment, before rallying later in the day as growing global uncertainty and broad US Dollar strength led to a marked downturn in market risk appetite.
GBP/NZD Exchange Rate Rallies in Thin ‘Kiwi’ Trade
The Pound New Zealand Dollar (GBP/NZD) exchange rate met a similar fate to GBP/AUD on Monday, with the pairing rebounding from its early losses as falling risk sentiment and thin trade in the ‘Kiwi’ during the Labour Day holiday allowed Sterling to quickly bounce back.