Tuesday’s session was dominated by the British pound and Brexit’s pending vote on how the U.K. will leave the European Union on March 29.
The British pound
GBPUSD, -0.4867%
experienced a volatile morning, marked by a sharp 2% swing between its high and low-point, ahead of the key vote in Parliament on Prime Minister Theresa May’s revamped Brexit deal. The U.K.’s pro-Brexit European Research Group said it couldn’t recommend backing the prime minister in Tuesday’s vote. The vote is expected around 7 p.m. London time, or 3 p.m. Eastern.
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The U.K. leader received last-minute assurances on the treatment of the Northern Irish border, which has been at the heart of the issues surrounding Brexit, from European Commission President Jean-Claude Juncker late Monday. This initially supported the pound in Tuesday’s session. Critics of May’s deal worry that the special treatment of the border between Northern Ireland and the Republic of Ireland will leave the U.K. de facto in the European Union.
Sterling turned negative after U.K. Attorney General Geoffrey Cox said that while the changes May secured to her deal reduced the risk of the U.K. indefinitely being trapped in the customs union of the EU, it didn’t get eliminate legal risk, according to reports.
“Sterling took a nose dive on the back of the Cox statement. It was his opinion which matters the most, now that he has made it clear that the recent deal has no weight, the door is wide open for the sterling to move lower against the dollar,” said Naeem Aslam, chief market analyst at TF Global Markets.
The pound last bought $1.3124, having recovered from its session low but still down from $1.3149 late Monday. Against the euro
EURGBP, +0.7836%
sterling also dropped sharply, with the shared currency buying £0.8592, up 0.5%, also off its highs.
“Another historic defeat is strongly on the cards for Mrs. May and all options are on the table with respect to another election or no Brexit at all. For us, we are looking at the support level of 1.2650 which the price can easily touch after the parliament’s vote.” Aslam added.
In earlier data, U.K. January gross domestic product came in stronger than expected at 0.5%. Industrial production and manufacturing production for the same month also beat forecasts.
In other currencies, the U.S. dollar
DXY, -0.12%
was down 0.2% at 96.996, following the consumer price inflation read for February, which was in line with expectation. On the month, prices rose 0.2%, up from three straight months of no change. Year-on-year, prices slowed to 1.5% from 1.6% before.
The euro
EURUSD, +0.2846%
was slightly stronger, buying $1.1280, versus $1.1245 late Monday.
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Source : MTV
