The Pound Sterling rose to a two-month high point yesterday following another flat and progress-lacking round of Prime Minister’s Questions in the House of Commons.
Sterling reached $1.30 and €1.14 respectively as of yesterday’s morning trading, and has held these levels since, with investors confident that a no-deal Brexit scenario is all but certain to be avoided.
The latest boost comes after MPs questioned Prime Minister Theresa May in Parliament, with many proposing concessions over a customs union between the UK and the EU as a way of securing a majority in the House in order for May’s Plan B to pass in the chamber next Tuesday evening, when MPs will vote once again to decide on the direction of Brexit.
Another #PMQs where we learn very little. Questions not really answered and May refuses to rule out or an extension to Article 50 or entering a customs union.— Shehab Khan (@ShehabKhan) January 23, 2019
Impasse continues and still unclear how May will get any Brexit deal through the Commons.
Despite the PM’s refusal to budge on the customs union, the limited time before the end of March and the UK’s leaving date means that the business of the House is not likely to be concluded – even if Plan B passes next week. The potential of an extension was described by Labour’s Shadow Chancellor, John McDonnell, as a “sensible” decision. This likelihood of an extension to Article 50 has given investors further confidence that the worst case scenario is being avoided, and that a softer Brexit may be on the horizon.
The Pound’s gains against the Dollar and Euro have been aided by the US Federal Government’s shutdown – currently on a record-breaking day 34 of zero funding and mass closures – as well as poor Eurozone economic figures; particularly hitting Germany which saw its manufacturing PMI fall from 51.5 in December to 49.9 in January, with the fragility of the automotive industry a key factor.
Today the European Central Bank attempted to counteract the low confidence in the Eurozone by promising not to raise interest rates in the near future. The response has been steady market improvements for Germany’s DAX, France’s CAC, Italy’s FTSE MIB, and Spain’s IBEX, as well as the Europe-wide STOXX 600 – all up between 0.3% and 0.8% for today’s trading.