The pound lost over 1% against the greenback yesterday falling from levels of 1.3269 and down under 1.31 on the back of big Brexit concerns. At one stage it was looking like PM May could face being ousted if she failed to win a key trade bill amendment, this being the main driver of GBP’s weakness through the day. Pro-EU MPs wanted the UK to join a customs union if it fails to agree a free-trade deal with the EUR. The PM, who argues that such a deal would prevent the UK from striking new trade deals with other countries, won the vote by a six vote margin. However, the damage to the pound had seemingly been done and GBP/USD has continued to hug the 1.31 level over the last few hours. BoE Governor Carney’s comments yesterday morning probably didn’t help the situation. He said that “it would be a material event for interest rates if Britain leaves the European Union next year without a deal to smooth its departure. Our job is to make sure we are as prepared as possible.”
It could be make or break for the pound today with inflation due for release at 9:30. Theresa May is also due to face questions from Tory MPs over Brexit at the Liaison Committee of select committee chairs. PM’s Questions are also due to take place at noon, so we could well see volatility in the pound throughout the day today.