The Pound Sterling Rides The Bulls Aided By Favorable Wage Data And Prime Minister Johnson Push For A Brexit Deal
The tables seem to be turning for the Pound Sterling which has had a rough couple of months on account of the Brexit issue. However, this week the British currency surged to its levels since July.
The Pound’s bulls are believed to be motivated by statements made by the current British Prime Minister Boris Johnson who claims that he planned to pursue a Brexit deal before the October deadline. Johnson made the statement during a conference in which he pointed out that he was interested in securing a Brexit deal October.
The Pound Sterling had previously been on a massive downward spiral that was fueled by growing concerns about a no-deal Brexit especially as the deadline closed in.
However, Johnson’s statement suggests that he is willing to pursue a favorable Brexit deal with the U.K., contrary to his previous approach. Before he was appointed as the new British Prime Minister, Boris was very pro-Brexit and had even noted that he would push for the U.K.'s exit from the E.U. even if it meant leaving without a deal.
Parliament members in the U.K. recently backed a bill that was aimed at forcing Johnson to seek a Brexit deadline extension that would allow them to come up with a deal that will facilitate a soft Brexit. This pushed the Pound's performance against the Euro and the U.S. dollar on Tuesday.
The GBP/USD currency pair kicked off Tuesday’s morning trading session on a bearish trend before turning bullish on account of the Prime Minister’s statement. The currency pair exchange rate traded at its day’s low at 1.2306 on Tuesday, and it peaked at 1.2375. The exchange rate traded at 1.2360 at the time of this press.
Other factors behind the Pound’s rally
The GBP’s rally was also fueled by positive British economic growth data that was better than anticipated. Statistics indicated that the unemployment level was at the lowest levels achieved over the past 45 years. This also encouraged investors to speculate that the Bank of England would postpone rate cuts.
The Sterling Pound seems to be on the path of recovery now that there is renewed hope of a soft Brexit landing. British lawmakers are trying their best to steer away from the possibility of a no-deal Brexit, thus leading to some relative calmness in the market, which is encouraging to traders.
Despite the Pound’s recovering performance, there is still some uncertainty regarding the interest rate decision that the Bank of England will make.
Analysts also expect the recent suspension of the British Parliament to lead to a period of relative calmness for the Brexit situation. So far no parliament sessions are scheduled to take place for the next five weeks. This has also shifted the tide to the negotiation of a new deal by the E.U. and the U.K.
Nonetheless, the Pound is still in uncertain waters and therefore still at the mercy of volatility caused by news regarding major economic issues. The lack of a Brexit solution might make it hard for the Pound to maintain a strong upward momentum.