- Pound under pressure across the board on the back of the Brexit drama.
- UK PM May at the European Union summit in Brussels.
The GBP/USD pair broke previous lows and tumbled to 1.3063, reaching the lowest level since March 13. From the lows bounced to the upside and as of writing was hovering around 1.3085, slightly above the lows but still under pressure.
The move lower took place amid a decline fo the pound across the bard and also on the back of a stronger US dollar. The DXY printed a fresh daily high at 96.50, erasing yesterday’s losses that followed the Fed’s meeting.
Regarding the pound, UK political uncertainty and Brexit latest events weigh significantly. It is among the worst performers of the day. Reports indicate that leaders at the EU summit are asking UK PM May to get her deal approved in the Parliament before granting an extension to Article 50. Also, the date of the extension is being debated actively.
Earlier today, the Bank of England, as expected, kept its monetary policy unchanged, on an event mostly ignored by markets, offset by Brexit developments. “The BoE’s hands are currently tied as the bank awaits further news on Brexit. If either Theresa May manages to pass her deal before March 29 or if the UK and EU agree to a long deadline extension, we think it is plausible that the BoE will hike in August. Thus, both outcomes should decrease uncertainty somewhat in the short-run and make room for a hike, as the “wage hawks” in the MPC probably have been wanting for a while”, wrote Morten Lund, Research Analyst at Nordea Markets.
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