Home Daily Commentaries Sterling higher on post-Brexit deal

Sterling higher on post-Brexit deal

Tuesday 28 February, 2023

Daily Currency Update

British Prime Minister Rishi Sunak announced late Monday that the U.K. has struck a deal with the European Union on post-Brexit trade rules for Northern Ireland. The move seeks to resolve the tensions caused by trading rules for the only part of the U.K. that has a land border with the EU. The news has supported the Pound which had been on the decline against both the EUR and USD at the end of last week. GBP/USD touched 1.1930 at the start of this weeks session, but is now back up at 1.2090. GBP/EUR has traded in a narrower range, being as low as 1.1320 but now back up at 1.1390.

Macroeconomic data is thin on the ground today, with consumer confidence from the US being the only noteworthy release this afternoon. Market participants eyes will start to turn to Wednesday as Bank of England Governor Bailey is due to speak at the Cost of Living Crisis Conference, in London. US ISM manufacturing PMI is also tomorrow and ahead of Fridays services PMI.

Key Movers

France and Spain both released hotter-than-expected consumer price data for February earlier this morning. French consumer prices jumped 6.2% from a year ago, up from 6% in January, while the equivalent number in Spain rose to 6.1% year-on-year, a faster pace than the 5.9% during the 12 months to January. The news increases pressure on the European Central Bank to deliver more interest rate hikes, potentially weighing on growth in the region. Another 50-basis point rate hike at the ECB’s upcoming meeting in mid-March is widely expected, and the markets are currently pricing in another 75 basis points of moves in the Eurozone before the end of the summer. The news has done little to deter the gains seen in EUR/USD, which is no back up to 1.0600 after touching 1.0537 at the start of the week. Support coming from the recent post-Brexit deal struck on trade rules for Northern Ireland.

Expected Ranges

  • GBP/USD: 1.1980 - 1.2140 ▲
  • GBP/EUR: 1.1320 - 1.1410 ▲
  • GBP/AUD: 1.7880 - 1.8120 ▲
  • EUR/USD: 1.0560 - 1.0660 ▲