Brexit uncertainty and Budget expectations

  • Brexit uncertainty and Budget expectations infuse volatility in the pound

    The pound has traded in a wide range over the past couple of weeks as speculation over the UK’s upcoming Budget and lingering Brexit uncertainty dominated movement in the pairing.

    This has seen GBP/EUR trade between 1.17 and 1.20 as EUR/GBP slipped to 0.83.

    Meanwhile, GBP/USD fluctuated between 1.28 and 1.30, whilst EUR/USD slumped from 1.09 to 1.07.

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks.

    What’s been happening?

    The pound rocketed higher in mid-February, rising to a new 2020 high as market expectations for the UK government’s upcoming Budget were buoyed after Rishi Sunak took over as Chancellor of the Exchequer.

    However, Sterling subsequently fell back in the second half of February, with lingering Brexit jitters overshadowing a run of upbeat UK economic data.

    The euro has weakened over the past couple of weeks, undermined by some lacklustre Eurozone data and fears that Germany may be on the brink of a recession.

    Meanwhile, the rising panic surrounding the coronavirus has driven considerable demand for the US dollar in recent weeks as investors flocked to the safe-haven currency.

    What do you need to look out for?

    In the UK the spotlight is likely to remain on Brexit in the weeks to come as formal trade negotiations between the UK and EU finally get underway.

    Eurozone data is likely to continue acting as the main catalyst of movement in EUR exchange rates in the next couple of weeks, likely dragging on the euro if the data continues to print poorly.

    Meanwhile, coronavirus concerns are likely to keep the US dollar supported for the time being, but USD investors will also be keeping a close eye on the Democratic presidential primaries to see who is likely to challenge Donald Trump later this year.

     

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