Another week, another number one finish for the British pound after Brexit developments lean positive on news of a possible Brexit delay.
United Kingdom Headlines and Economic data
- EU ready to give Britain more guarantees ‘backstop’ is temporary: Barnier
- EU’s Tusk says Brexit delay would be ‘rational’
- Juncker and May vow to end Brexit negotiations before March 21
- Jeremy Corbyn says Labour would back a second Brexit referendum
- No-deal Brexit or short delay? British PM May offers lawmakers a choice
- Bank of England likely to help economy after no-deal Brexit: Carney
- Theresa May says Britain can still leave EU on 29 March
- U.K. House-Price Growth Still Subdued on Brexit, Nationwide Says
- UK Consumer Confidence is “stoic amid fear of the unknown”
- Brexit: EU rejects ‘mini deals’ on citizens’ rights
- UK Manufacturing PMI at 52.0 in February (four-month low); manufacturers report further survey-record stockpiling of inputs in February
- Britain’s Labour Party leader backs Brexit referendum
Major Market Drivers for the British Pound
British pound pairs were once again driven by Brexit news this week, and this week’s main Brexit headline was British PM Theresa May giving parliament the opportunity to vote in two weeks for a delay to Brexit or to leave the European Union without a deal if she can’t secure an amended deal. This was a major change to recent rhetoric from May who opposed an extension, and it greatly increased the probability of the U.K. crashing out of the EU, the worst possible outcome. Traders pumped up the British pound on the news, a move that lasted into the end of Wednesday’s trading session.
As we can see in the GBP chart overlay above, with a lack of any market moving headlines or data on Thursday and Friday, it appears that Sterling pairs price action stabilized and then diverged, suggesting that counter currency influences began to be the main driver. Asia region currencies (JPY, AUD, NZD) were likely driven lower on Chinese data, the Loonie tracked oil prices that moved on a slew of catalysts pushing it lower, and the EUR and CHF saw relative buying support on the same positive Brexit developments as the British pound.
Although, U.K. headlines may not have been total duds at the end of the week as we can observe a slight bearish lean in GBP pairs (with exception to the Japanese yen), possibly attributable to disappointing updates to U.K. house prices and consumer confidence, or maybe the continued divide between members of the U.K. parliament as it appears that the Labour party seeks the second referendum option as the only option, raising the odds that a Brexit deal in any form will not pass parliament.Whatever the cause for the pullback may be, it wasn’t enough to unseat the British pound from taking the top spot among the major currencies once again!