The pound faced further problems in the international currency markets yesterday after further instability emerged over the proposed Brexit deal.
Overall, the pound dropped 1.3% against the US dollar over the course of Monday – hitting $1.2565 at one stage. It remained near that position this morning as trading reopened.
It represents a twenty-month low for sterling, which has seen its fair share of problems in recent weeks as the Brexit deal continues to be debated.
However, yesterday’s decline was especially strong. It came after Prime Minister Theresa May announced that she would call off the crucial parliamentary vote planned for today on the terms of the deal.
She has gone back to European leaders to potentially re-negotiate the deal, although it is believed that there are many other possible outcomes, including another referendum on the terms of the deal.
The US dollar was a major victory in the face of the pound’s problems. It rose following its previous fortnight or so of low performance. The dollar index, which tracks its performance in comparison to six other international currencies, broke the 97.00 mark by rising 0.75%.
More broadly, it’s another busy week in the foreign exchange markets this week.
Today (Tuesday) sees a speech from Adrian Orr, the Governor of the Reserve Bank of New Zealand, at 7.15pm GMT.
This will be followed by the Australian Westpac consumer confidence survey covering December at 11.30pm GMT. The last recorded position for this was 2.8%.
Into tomorrow, a series of vital US data releases are due out at 1.30pm GMT. These include the consumer price index for November, which without food and energy is expected to show a rise from 2.1% to 2.2%.
Later in the day, the US’ monthly budget statement for November from the Financial Management Service is expected at 7pm GMT.
Into Thursday, there’ll be an interest rate decision from the Swiss National Bank at 8.30am GMT.
At 12.45pm GMT, there’ll be a European interest rate decision from the European Central Bank, as well as a deposit rate decision at the same time. An explanation of the decision is expected at 1.30pm GMT when a press conference and statement are released.
Also due at 1.30pm GMT is the Canadian housing price index data covering October. Month on month, this is expected to remain the same at 0%.
Friday is also full on the economic calendar. Spanish consumer price index information for November is due out at 8am GMT and is expected to remain steady year on year at 1.7%.
Italian consumer price index information for the same month will follow at 10am GMT. Month on month, this is expected to also remain constant at -0.1% this time.
Data on retail sales in the US covering November is expected at 1.30pm GMT. Month on month, this figure is expected to drop from 0.8% to 0.2%.
There will be some action over the weekend, too. Mario Draghi, who is the President of the European Central Bank, is due to speak at 10.30am GMT on Saturday.