Yesterday was looking like a positive day for the pound until late in the afternoon it transpired that Parliament voted to ensure a no-deal scenario remains on the table.
The morning session started off with Boris Johnson’s campaign launch. His clear and concise tone soothed market concerns about previous comments relating to leaving on 31st October without a deal. Sterling pushed to the highs of the day, reaching $1.2760 and €1.1270 against the US dollar and euro, respectively.
Lunchtime saw a weaker than forecast US inflation reading for May. This allowed the pound to hold on to its gains against the buck. While the report was softer than many had anticipated it still wasn’t enough to create a strong sell off in the buck. In essence, the reading was not enough in itself to push the Fed to lower interest rates. Following the release, cable (GBPUSD) narrowly edged to a new session high.
The afternoon session saw the pound stumble. MPs voted by 309 vs 298 to prevent no-deal being taken off the table. This will be music to the ears of Brexiter Tory leadership hopefuls such as Johnson, Raab and Leadsom. The pound swiftly moved lower, surrendering all its daily gains and some. By close of European trade sterling was languishing at $1.2680 and €1.1215. 1 step forward, 2 steps back. Sad!
Today is more subdued in respect to economic numbers. Highlights to include Eurozone industrial production, US jobless claims and a monetary policy decision from the Swiss National Bank. Focus will undoubtedly remain on the pound as traders & dealers tests its resolve after yesterday’s Parliamentary blow.
Written by Viv Savani. 8:25am, June 13th 2019
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