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Sun 17 Nov 2019 23:25GMT

Forex Markets Eagerly Awaiting Saturday’s Brexit Showdown for British Pound Outlook

Published: 18 Oct at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling (GBP)
The Pound’s movement remained volatile until the end of the week. While relief over a new UK-EU Brexit deal helped the Pound to sustain gains throughout the week overall, uncertainty persists over whether the deal will actually be able to make it through UK Parliament.

Parliament will hold its anticipated vote on the Brexit plan on Saturday, and markets will react to the outcome when markets open on Monday. If the plan is blocked as analysts predict, the Pound could slide as no-deal Brexit concerns will rise again.


Euro (EUR)
While the Pound has taken the brunt of recent Brexit developments, hopes that UK-EU negotiations were finally over have supported the Euro as well. Amid weakness in the US Dollar (USD), the Euro’s biggest rival, the shared currency has been able to avoid deeper losses even with the Eurozone economic outlook gloomy.

German PPI data could influence Euro movement on Monday, but the Euro is likely to be driven by movement in rivals until key Eurozone PMI data is published later in the week.


US Dollar (USD)
The Pound to US Dollar exchange rate saw strong gains last week. The US Dollar was unable to capitalise on the Pound’s late-week volatility, due to concerns about the US economic outlook following surprising contractions in US retail activity and production. Federal Reserve interest rate cut bets are rising as a result of the data.

Next week’s US economic calendar will be a little quieter, so Federal Reserve interest rate cut speculation and developments in US-China trade relations will continue to drive the US Dollar on Monday.


Australian Dollar (AUD)
Due to a combination of stronger Australian data and US-China trade hopes, Reserve Bank of Australia (RBA) Governor Philip Lowe has indicated the bank may not need to cut Australian interest rates further. This left the Australian Dollar as one of the week’s best-performing currencies.

The Australian Dollar could continue to benefit from fading RBA rate cut speculation in the coming sessions, and any optimistic developments in US-China trade relations would also boost the ‘Aussie’.


New Zealand Dollar (NZD)
Signs of strength in New Zealand’s economy, such as recent inflation stats and strong export prices, have doused market speculation that the Reserve Bank of New Zealand (RBNZ) will become more and more dovish. Amid speculation that the RBNZ’s November rate cut could be the last for a while, the New Zealand Dollar has seen strong performance in recent sessions.

Investors will get a better idea of the health of New Zealand trade from Wednesday’s trade balance report. That aside, NZD investors will be reacting to US-China trade developments and global trade-sentiment.


Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate’s gains were limited for most of the week, but the Canadian Dollar was unable to recover many of its losses versus Sterling either. Some mixed Canadian ecostats towards the end of the week made it more difficult for the trade-correlated Canadian Dollar to capitalise on rising commodity prices.

Canadian Dollar investors are also anxious about the outcome of Monday’s upcoming Canadian election, with the two front-running parties too close to call in recent polls. This will leave CAD jittery on Monday.
As of Friday, 18th October 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1621, GBP USD exchange rate was 1.2981, GBP AUD exchange rate was 1.8938, GBP NZD exchange rate was 2.033, GBP CAD exchange rate was 1.7039, and GBP CNY exchange rate was 9.1927.
Dominic Lee About Author: (377 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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