Pound climbs as EU repeal bill passes first vote

Sterling gained on several of its rivals on Monday in response to the news that the EU repeal bill won its first Commons vote.

GBP/EUR advanced to €1.1017, GBP/USD remained in the region of $1.3190, GBP/AUD hit a high of AU$1.6466, GBP/NZD fluctuated around NZ$1.840, and GBP/CAD retraced some of its gains to trade around C$1.5960.

What impact will UK inflation data have on the pound? Keep reading to find out…

What’s been happening?

The week got off to a fairly quiet start in terms of exciting data releases, with little on the economic calendar to cause a stir in the currency market.

However, Sterling did derive some support from the expectation that the EU repeal bill would pass its first parliamentary vote, despite opposition from the Labour Party.

And the bill did pass, being backed by 326 votes to 290.

According to the BBC; ‘Prime Minister Theresa May welcomed the Commons vote in the early hours of Tuesday morning, saying the bill offered "certainty and clarity" - but Labour described it as an "affront to parliamentary democracy”.

Having cleared the second reading stage, the bill will now face more attempts to change it with Conservative MPs believed to have tabled new amendments.’

Overnight the New Zealand dollar was little changed after the NAB Business Conditions index improved from 14 to 15 while the Business Confidence measure slid from 12 to 5.

What's coming up?

The UK’s inflation figures for August will be the main cause of GBP exchange rate movement today.

If inflation rises by 0.5% on the month and 2.8% on the year – as forecast – the report might have a modest impact on Bank of England (BoE) rate hike expectations and give Sterling a lift.

Meanwhile, a speech from European Central Bank Vice President Vítor Constâncio may inspire EUR fluctuations later in the day.

Investors will also be looking ahead to tomorrow’s German inflation data and UK employment figures.

It is expected that the German inflation report will confirm a month-on-month reading of 0.1% and year-on-year result of 1.8%.

If British wage growth falls short it will heighten concerns of a slowdown in the all-important services sector and put the pound under pressure.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.