The pound fell on Tuesday as lawmakers took the first steps to voting on the government’s EU withdrawal agreement. The pound had risen as high as $1.32 in the morning but fell when US markets opened, down 0.3%. The relief that the UK will finally be leaving the EU at the end of the month has now been surpassed by the uncertainty surrounding ongoing negotiations.
The withdrawal agreement is going through three days of debate starting yesterday so will likely pass unchanged through parliament on Thursday and then will proceed to the upper House of Lords where it will likely do the same.
GBPUSD opened at 1.3142 and jumped to a morning high of 1.3210 before quickly dropping back down in the afternoon to close at 1.3125
GBPEUR opened at 1.1768 and reached a high of 1.1808 before hitting a midday low of 1.1733 and closing at 1.1781
The US dollar made gains against safe-haven currencies yesterday as investors were hopeful that tensions between the US and Iran would not escalate to a war. The dollar was also assisted by US non-manufacturing sector and factory orders data. The dollar gained 0.4% against the Swiss franc and the dollar index gained 0.3%.
The euro fell 0.4% against the dollar, the single currency was unmoved by data showing inflation had decelerated in December and retail sales were stronger than expected. Recent surveys have also pointed towards increased investor confidence in the eurozone.
Elsewhere the Chinese yuan rose to a five-month high against the dollar, with traders putting aside previous trade negotiation concerns to instead focus on issues between Washington and Iran. The yuan gained 0.5% against the dollar with the US and China due to sign a preliminary deal on January 15th to de-escalate the ongoing trade war.
EURUSD opened at 1.1177 and fell across the day to a low of 1.1138 where it closed shortly after.
Overnight the safe-haven currencies bounced back in light of reports that Iran had targeted strikes at US military bases in Iraq, stoking fears of war.