The GBP surprisingly rose against the USD on Friday reaching 1 month highs of 1.2859. This comes despite the crucial Parliament Brexit vote early Wednesday morning, where volatility is likely to be expected. It appears the market is anticipating that PM Theresa May will lose, and as a result the case for this is already being priced in. While the outlook favours the government to lose, it is more of a question of by ‘how much’ rather than ‘whether’. The reaction to the markets will likely depend on the margin of the size, as if it is slim, a possibility for another vote is there.
Bank of England Governor Mark Carney is scheduled to testify Wednesday evening, along with three Financial Policy Committee members. Expected to have a major impact on the currency, Gov. Carney will speak about the Financial Stability Report before the Treasury Select Committee in London. Volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.
The GBP opened at 1.2855 against the USD this morning.