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The pound enjoyed a day of pretty solid gains at the start of the week, with the currency rising to an almost two-month high against the US dollar while recording its best level against the Canadian dollar since December. GBP/AUD also marched to its highest rate since February, although the pound’s gains against the euro were more muted.
GBP/EUR spent the day fluctuating between €1.1467 and €1.1615, GBP/USD advanced from a low of $1.2365 to a high of $1.2612 and GBP/CAD stormed to a high of C$1.6872.
What’s been happening?
Yesterday the pound managed to romp higher against most of its currency rivals despite a lack of juicy UK data. The currency’s gains were largely in reaction to developments in the US, with a lack of confidence in President Trump’s abilities to push through economic policies triggering heavy US dollar losses.
Comments from Fed policymaker Charles Evans also kept the US dollar under pressure. Although the Federal Reserve Bank of Chicago President indicated that he still envisages three rate hikes taking place this year, he added that two may be appropriate if the current inflation uncertainty persists.
Meanwhile, upbeat German IFO surveys limited the pound’s gains against the euro, with German business morale hitting its best level for almost six years.
What’s coming up?
Today the Scottish government is expected to vote in favour of making a request to Westminster for a second independence referendum. Yesterday Prime Minister Theresa May visited Scotland in order to urge Scottish voters to keep Britain unified, asserting that (with Brexit negotiations about to kick off) now is not the time for more discord.
If the Scottish government does vote in favour of pushing forward with referendum plans, the pound could register modest losses later today.
GBP exchange rates may also start giving up their recent gains ahead of tomorrow and the much-anticipated activation of Article 50.
There’s no UK data on the calendar today, but there are US trade balance and consumer confidence figures to look out for. Speeches from various Fed officials (including Chairwoman Janet Yellen) will also be drawing focus, with any interest rate-related remarks having the potential to either send the US dollar lower still or help it recover ground.
Additionally, the GBP/CAD exchange rate could move away from its recent highs if Bank of Canada Governor Stephen Poloz adopts an optimistic tone in today’s speech.
