Home Daily Commentaries Sterling treads water as Brexit deadlock continues

Sterling treads water as Brexit deadlock continues

Daily Currency Update

In the absence of any concrete developments re: Brexit GBP/USD continues to hold just above the 1.30 level. UK PM, Theresa May and EU Commissioner, Jean-Claude Juncker’s meeting on Wednesday produced little other than warm words that talks were ongoing in an effort to break the deadlock. Another parliamentary vote on Brexit is due on the 27th Feb with May stating that should no agreement be in place by then she will open the door to parliament taking control of the process thereby shelving her withdrawal agreement. An extension to Article 50 is becoming ever more likely with many senior government ministers warning about the threat a no-deal scenario will cause the UK economy. Next week could be very choppy for the pound.

Key Movers

Like sterling, the dollar has been relatively unmoved against its top tier peers this week in the absence of any solid developments re: the US/China trade war. US President, Donald Trump is due to meet Chinese Vice Premier, Liu He today in Washington as the March 1st deadline for a deal gets ever nearer. Trump has signaled he may delay the imposition of higher tariffs in March should he see progress being made in the dispute. Yesterday’s data saw worse than expected Durable Goods orders and Philly Fed Manufacturing Index from the States. Todays is dominated by Fed-speak with four members of the FOMC due to give speeches throughout the evening. USD/JPY trades at 110.76 with EUR/USD at 1.1350.


The euro was unmoved by yesterday’s release of the minutes of the European Central Banks January policy decision. With economic gloom descending on the Eurozone recently a move higher in interest rates looks unlikely this year with the first half of next year penciled in for a hike. ECB chief, Mario Draghi is due to speak this afternoon in Bologna however it’s unlikely monetary policy will be discussed as he accepts an honourary degree from the University of Bologna. GBP/EUR trades at 1.1490.


The Aussie remains subdued after the announcement China was banning imports of its coal through the Dalian port network. Reserve Bank of Australia chief, Philip Lowe kept his cards close to his chest in testimony on monetary policy overnight. Lowe indicated that he expects rates to be kept on hold throughout this year as falling house prices were highlighted as being a concern for the economy. AUD/USD trades at .7115 with GBP/AUD sitting at 1.8225.


Retail Sales numbers are due this afternoon from Canada with a flat reading expected for December. The core number which strips out car sales is expected to slip -0.5% after Novembers -0.6% drop. USD/CAD trades around 1.3220 with GBP/CAD at 1.7230.


The kiwi has recovered after dropping on this week’s announcement re: Australian coal imports to China. NZD/USD is currently just under the .68 handle with any breakthrough in the US/China trade dispute likely to be the main mover for the local dollar throughout this afternoon. GBP/NZD is at 1.9170.

Expected Ranges

  • GBP/USD: 1.2960 - 1.3100 ▼
  • GBP/EUR: 1.1420 - 1.1535 ▼
  • GBP/AUD: 1.8275 - 1.8415 ▼
  • GBP/CAD: 1.7150 - 1.7290 ▼
  • GBP/NZD: 1.9120 - 1.9300 ▼