Pound at 2-Week High Ahead of May-Juncker Brexit Meeting

The British pound was in high demand on Tuesday ahead of an important meeting between British PM Theresa May and EU officials, at which investors are hoping for a Brexit breakthrough.

Email share     Facebook     LinkedIn    Twitter

The pound was by far the best performer on Tuesday; it gained nearly 1.5 cents against the US dollar and now buys US$1.3055—a 2-week high.

Sterling’s gains spread far and wide. Against the euro, it changed hands at €1.15 for the first time in 3 weeks, and against the Australian dollar, it rose back towards last week’s levels in the mid-A$1.82s.

Traders are seemingly hopeful that Wednesday’s meeting in Brussels between British Prime Minister Theresa May and European Commission President Jean-Claude Juncker will bear fruit in the form of a breakthrough on the contentious Irish backstop. The meeting has been described as “significant” by a No 10 spokesperson, though Juncker has said he is not expecting a “concrete outcome.”

With a 12 percent loss against both the dollar and euro since the UK’s referendum on EU membership in June 2016, sterling bulls desperately need a deal; in the absence of one, the currency might lose 15-25 percent of its value, per the Bank of England.

Currency analysts at HSBC said earlier this month that sterling would be valued at levels near US$1.10 in the event of no-deal, near US$1.45 with a deal and at US$1.55 should Article 50 be revoked and Brexit cancelled entirely.

Fears for the UK’s economic future are being stoked on a daily basis—Honda confirmed on Thursday that is was axing 3,500 jobs in Swindon—and so a non-event of a meeting on Wednesday will likely see a sharp reversal in the pound’s trajectory.

Tuesday also brought with it the release of hard economic data. Although the ONS announced another record high in the number of Brits employed, the data was seen as backward-looking by traders and was ignored. There are clearly bigger (Brexit) fish to fry.


Further Reading


Coronavirus panic drives US dollar strength

Currency rates were extremely volatile last week as the coronavirus situation worsened day by day with various countries implementing ever-tougher measures to stop the spread of the disease.

Last update: 23 Mar, 2020

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020


Posted to: News

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.

Get a Better FX Deal when you Send and Spend Abroad.


Do NOT follow this link or you will be banned from the site!