What’s Coming Up: Pound (GBP) Exchange Rates to be Driven by Brexit ‘Plan B’ Vote Outcome
The Pound (GBP) is expected to start next week a little worse for wear after doubts began to set in on Friday over Theresa May’s Brexit ‘Plan B’.
Monday, therefore, will likely see Pound exchange rates generally fall as apprehension of Tuesday’s vote, combined with a general lack of significant UK data stats, will likely hinder Sterling strength.
Tuesday also sees a lack of UK economic data being released, but the main focus will be on the parliamentary vote on Brexit ‘Plan B’ vote, with any likelihood of it being rejected potentially weakening Pound exchange rates.
Wednesday, meanwhile, will see the publication of the UK mortgage approvals figures for December which are expected to decrease, potentially dampening confidence in the UK economy.
The publication of the Gfk consumer confidence figures for January on Thursday are also expected to decrease.
Friday will see the publication of the UK Markit manufacturing PMI figures for January, with any signs of an increase potentially further weakening Sterling exchange rates.
These will be followed by the release of the UK mortgage approvals figures for January.
For the most part, GBP exchange rates will likely be dictated by the outcome of the House of Commons’ verdict on Theresa May’s ‘Plan B’ next week, with Brexit discussions likely to heat up considerably if the deal is rejected, potentially throwing Sterling into a state of volatility throughout the week.
What’s Been Happening: Pound Exchange Rates Fluctuate as Sterling Rides Brexit ‘Plan B’ Rollercoaster
The Pound has been plagued by fluctuations this week as traders awaited developments on Prime Minister Theresa May’s Brexit ‘Plan B’.
With many feeling that it is a repeat of much of what happened with ‘Plan A’, this pushed back some of the optimism that the Brexit stalemate would finally be broken.
The opposition leader Jeremy Corbyn also refused to partake in cross-party talks unless Theresa May removed a Brexit no-deal from the table, although May remained otherwise resolute and refused to comply.
Tuesday saw the Pound gain some momentum after the publication of the UK ILO unemployment figures for November, which fell to a better-than-expected 4.0%, providing some much-needed uplift for Sterling.
The Pound was also bolstered on Tuesday following the publication of the average earnings figures which increased above expectation, lending GBP further support.
Wednesday saw the Pound maintain the previous day’s gains, and with Labour tabling an amendment which would affectively limit the chances of a no-deal Brexit by offering the option of extending Article 50, many traders became optimistic about Sterling.
The GBP exchange rate remained stable throughout Wednesday with no publications of any significant UK data.
Thursday saw the Democratic Unionist Party (DUP) say that it would back Theresa May’s deal if she ‘toughened it up’ and negotiated a possible time-limit on the Irish backstop; this followed some surprising support from Conservative Brexiteer Jacob Rees-Mogg, who agreed to back the deal if it was ‘reformed’.
Friday saw the publication of the UK BBA mortgage approval figures for December, which fell below forecast to 8.779k, somewhat dampening investors’ confidence in the British economy.
Doubts began to creep in on Friday over whether Theresa May had succeeded in gaining the confidence of Parliament to see her ‘Plan B’ Brexit deal succeed through the House of Commons on Tuesday, leading to the Pound falling throughout the day.
By the end of the week, Sterling had given up many of the gains it had made over the week, with all eyes now turned to Tuesday’s Commons vote on Brexit to provide direction for Sterling exchange rates in the coming sessions.