Home Daily Commentaries May heads to Brussels after surviving no confidence vote.

May heads to Brussels after surviving no confidence vote.

Daily Currency Update

It was another dramatic day in UK politics yesterday as Prime Minister, Theresa May, survived a vote of no confidence brought upon her by members of her own Conservative Party. Early yesterday morning it was confirmed that the Tory backbench 1922 Committee had received the 48 letters needed from its MPs to trigger a vote of no confidence. Events unfolded quickly as it was announced that the vote would take place in the evening with the result due around 9pm. Sterling wobbled on the announcement however GBP/USD soon rallied on a series of reports/tweets from political commentators that Theresa May would easily win the vote. Cable quickly pushed back through 1.26 by lunchtime and peaked around 1.2675 shortly before Sir Graham Brady, the Chairman of the 1922 Committee announced the result. May won by 200 votes to 117 however the amount of votes against her saw the pound slip. This morning it has rallied again as May heads to Brussels to meet EU leaders in an effort to get some sort of concession re: the Irish backstop that has enraged Brexiteer members of her own party. GBP/USD is back up to 1.2670 at present so it seems there is some confidence in the markets that we will see some softening of tone from the EU despite words hitherto saying there will be no amendments to the deal.

Key Movers

Yesterday’s main data-set came from the States with the latest CPI numbers hitting target. The overall reading showed no increase in prices m/m with the core reading showing a 0.2% uptick. Despite the numbers meeting expectations EUR/USD pushed higher with the slowest overall inflation reading since April’s negative number possibly catching trader’s eyes. With growth having peaked, dovish comments from the Fed and a negative yield curve hitting the shorter end of US Treasuries of late we could finally be seeing the end of the dollar bull run, however this has already been said several times throughout this year and it has maintained its momentum. Tomorrow sees US Retail Sales from the States with small monthly increases expected for both the overall and core numbers. USD/JPY is at 113.44 with EUR/USD at 1.1380.


Today’s big news is the European Central Bank’s interest rate decision and press conference where it is expected to be confirmed by ECB chief, Mario Draghi that its Quantitative Easing program has finally been brought to an end. The extraordinary measure was seen as saving the Eurozone from imploding during the height of the Greek debt crisis enabling countries such as Spain and Italy (where bond yields had risen to unsustainable levels) to get borrowing costs under control. As always the press conference will be the main talking point so dovish/hawkish comments from Draghi on the timing of the next rate hike and the state of the EZ economy will be the main movers of euro-crosses. GBP/EUR is at 1.1135.


Asian equities opened higher this morning as an improvement in tone between the US and China re: trade helped risk assets. As a result the Aussie has recouped some its losses seen yesterday however the gains are relatively modest. AUD/USD is up to .7240 after bouncing off the .72 level. In the absence of any domestic data US CPI, Brexit, US/China/Trade and the ECB rate decision will be the main movers for the Aussie the rest of the week. GBP/AUD trades at 1.75.


A pull back in oil prices has depressed the loonie over the past 24 hours. A retracement in Brent crude from around $61.5pb to the $60pb level has pushed USD/CAD back towards the 1.3350 handle when a dip below the big number was looking on the cards. There is no data for the rest of the week from Canada so oil and other external factors will likely drive the local buck. GBP/CAD trades at 1.6905.


The Kiwi has mirrored the Aussies modest appreciation over the past 24 hours as a mildly risk-on tone benefits the Kiwi-dollar. There is little in the diary for the rest of the week from NZ however next week sees ANZ Business Confidence Numbers and GDP figures published. GBP/NZD is at 1.8435.

Expected Ranges

  • GBP/USD: 1.2580 - 1.2750 ▲
  • GBP/EUR: 1.1055 - 1.1265 ▲
  • GBP/AUD: 1.7425 - 1.7650 ▲
  • GBP/CAD: 1.6825 - 1.7030 ▲
  • GBP/NZD: 1.8375 - 1.8560 ▲