GBP Exchange Rate News: Pound Lacks Direction as Parliament Reconvenes

Pound (GBP) Muted as Politics Returns to the Fore

The Pound (GBP) was left mostly rangebound through yesterday’s session as UK politics and Brexit were back in focus following the reconvening of Parliament.

This saw MPs resume their scrutiny of Boris Johnson’s EU withdrawal bill, which is expected to pass through parliament by the end of the week thanks to the PM’s comfortable majority in the House of Commons.

Brexit will remain in the spotlight today as Johnson hosts European Commission President Ursula Von Der Leyen in Downing Street for a meeting which is expected to include discussions over the next stage of negotiations.

Euro (EUR) Flat Despite Upbeat Data

The Euro (EUR) also traded in a narrow range on Tuesday in spite of some upbeat Eurozone economic data.

Eurostat reported that inflation in the bloc accelerated to a six-month high in December, while Eurozone retail sales beat expectations in November, but this failed to inspire movement in the single currency.

Meanwhile, the Euro could come under pressure this morning after Germany reported domestic factory orders missed expectations, with a surprise contraction in November.

US Dollar (USD) Firms as US Services PMI Impresses

The US Dollar (USD) pushed higher yesterday, recouping the majority of Monday’s losses on the back of the latest ISM non-manufacturing PMI.

The index leapt from 53.9 to 55 in December, beating forecasts for a more modest rise to 54.5 and indicating the US service sector closed out 2019 on a strong footing.

Subsiding concerns over US-Iran tensions also lent the US Dollar support.

On the docket for USD investors today we have the latest ADP employment figures, with a strong reading set to buoy expectations for Friday’s more influential payroll report.

Canadian Dollar (CAD) Subdued as Oil Prices Slide

The Canadian Dollar (CAD) struggled to find momentum on Tuesday as demand for the oil-sensitive ‘Loonie’ was dented by a pullback in crude prices.

The fall in oil prices comes as markets expressed their relief that US-Iran tensions haven’t escalated further.

Australian Dollar (AUD) Plummets on RBA Rate Cut Speculation

The Australian Dollar (AUD) fell across the board on Tuesday amid rising speculation that the Reserve Bank of Australia (RBA) will cut interest rates next month.

While a strong employment report in November had previously dampened expectations, Australia’s bushfire crisis has upped the odds that the RBA will intervene with another rate cut in February in order to protect growth.

New Zealand Dollar (NZD) Fluctuates as Geopolitical Tensions Rise

The New Zealand Dollar (NZD) traded in a wide range overnight on Tuesday following the news that Iran had carried out a ballistic missile attack against two US bases in Iraq in retaliation for the killing of Iranian General Qasem Soleimani.

While the initial response to the news saw the risk-sensitive ‘Kiwi’ slump, NZD exchange rates were quick to rebound after US President Donald Trump tweeted that ‘all was well’.

Matthew Andrews

Contact Matthew Andrews