Pound Rallies in Forex Markets After Post-Vote Drop

James West

european union flag and flag of britainThe British pound managed to pull back to a high point in the foreign exchange markets on Wednesday after a defeat for the government in the most recent Brexit vote.

Prime Minister Theresa May had attempted to secure support for her new bill to pass, but it failed –leaving the next steps unclear.

As a result of the uncertainty, the pound went down by 0.65% over the course of yesterday in the GBP/USD pair and reached $1.3290 at one stage.

It managed to recover to the $1.3064 region by morning trading. The next major hurdle for the UK government will be a vote this evening on whether or not to reject the possibility of “no deal” completely.

Elsewhere, the US dollar index, which tracks the performance of the greenback compared to six major global currencies, went down by 0.3%.

Further woes for the Australian economy were reflected in a data release which indicated that March’s consumer confidence was down to its worst position in more than 12 months. As a result, the Australian dollar dropped by 0.2%.

The European single currency, which had enjoyed a rise yesterday, remained constant.

With the halfway point of the forex trading week now here, there’s still a lot to look out for as the week goes on.

Today (Wednesday), there will be a number of key European data releases. Europe-wide industrial production figures for the month of January will be out at 10am GMT and are expected to show a change from -0.9% to +1%.

US producer price index figures for the month of February are due at 12.30pm GMT. They are expected to show a drop from 2% to 1.9% year on year.

US durable goods orders data for January will also be out then. It’s forecast that this will show a drop from 1.2% to -0.5%.

Information on foreign investment in Japanese stocks for the period around March 8th will be out at 11.50pm GMT.

On Thursday, Chinese retail sales information for the month of February are due to be released at 2am GMT. A drop from 8.2% to 8.1% is expected.

Initial jobless claims information for the period around March 4th will come out of the US at 12.30pm GMT. This is expected to show a change from 223,000 to 225,000.

Continuing jobless claims for the days around March 1st will be out at the same time. This is forecast to show a slight upward shift from 1,755,000 to 1,775,000.

On Friday, the first key event of the day is likely to be the Bank of Japan’s interest rate decision, which is due out at 2am GMT. This is expected to show no change from -0.1%.

The European consumer price index for the month of February is also expected. Month on month, this is due to change from -1% to +0.3%.

At 2pm GMT, the preliminary Michigan Consumer Sentiment Index released by the University of Michigan in the US will be out. This is forecast to show a change from 93.8 to 93.

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James West
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