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Letters of no confidence for Boris Johnson

Daily Currency Update

Further questions have been raised about how long Prime Minister Boris Johnson can remain in power at number 10 after more than a dozen MPs submitted letters of no confidence, with many more believed to have done so privately. If 54 letters are sent to the 1922 Committee, a vote of no confidence would be triggered and if Johnson lost, his time as Prime Minister would come to an end. There has been mounting pressure for him to step down over a number of different stories in recent weeks, however he is steadfast that he will remain in place for now.

Sterling steadied against the euro on Monday after a sharp slide last week, triggered by the European Central Bank’s more hawkish tone, which overshadowed the Bank of England’s interest rate rise.

By the end of the European session on Monday, Sterling flattened against the euro at 1.1835, after touching its lowest level against the euro since December 2021 at 1.1794. The pound also lost some steam against the US dollar, flattening at 1.3528, after hitting its lowest level in almost one week against the US dollar.

Key Movers

It was a quiet day for the most part yesterday, with the market settling down after a hectic ending to last week. German industrial production dropped by 0.3% month-on-month in December, vs an expected 0.4% gain. Industrial activity was weakened mainly by the construction sector, which shrank by more than 7%. The ECB opened the door last week to an interest rate hike later in 2022 and said that the March meeting will be crucial in deciding how quickly the central bank would wind down its long-running bond-buying scheme. Markets have now priced in a 50bps interest rate hike this year. However some economists are more cautious, predicting the first hike to happen at the end of the year or early 2023.

Expected Ranges

  • GBP/USD: 1.3505 - 1.3595 ▲
  • GBP/EUR: 1.1830 - 1.1925 ▲
  • GBP/AUD: 1.8950 - 1.9050 ▲
  • EUR/USD: 1.1360 - 1.1420 ▼