The pound jumped to a five-week high on Thursday as MPs voted to prevent Prime Minister Boris Johnson from taking the UK out of the EU on the 31st of October without an agreement in place. The PM’s brother Jo Johnson also resigned as a minister, referring to the conflict between family and the national interest. Political uncertainty remains high as the UK is almost inevitably heading for a general election.
The 0.8% rise against the dollar is the highest since July 29th and is the biggest one-day jump since March. Some analysts believe that a delay to the UK’s departure date until January 31st could cause the pound to rise as high as $1.30 Pound rallies will still be limited until there is further clarity on outcomes rather than just the aversion of a hard Brexit.
GBPUSD opened at 1.2247 and jumped to a high of 1.2346 before levelling out to close at 1.2319
GBPEUR opened at 1.1100 and followed a similar pattern, jumping to 1.1165 but then continuing to rise slowly to hit a high of 1.1176 shortly after closing
The dollar gained 0.53% against the Japanese yen yesterday as optimism regarding US-China trade talks reduce the demand for safe have currencies. The dollar index dropped 0.04% but there was positive US economic data regarding the labour market and the service sector. Monthly payroll reports are due at 12:30 GMT today, traders are hoping for confirmation of the resilience of the labour market.
The euro had been forecast to gain around 4% against the dollar in a year from Thursday despite the European Central Bank being expected to announce economic stimulus measures next week. For this year, the euro was expected to underperform the dollar, making it the seventh year in the last decade.
EURUSD opened at 1.1039 and jumped to a high of 1.1076 before falling again quickly to close almost where it started at 1.1040
