GBP is currently soaring against the USD, as investors digest the prospect of MPs voting on no-deal Brexit from the European Union.
The UK parliament rejected on whether to leave the European bloc with a no-deal Brexit. Now that the no-deal Brexit has been rejected, a vote on Thursday will decide whether or not to extend the Brexit deadline.
Today’s key vote followed Tuesday night’s crushing defeat of Prime Minister Theresa May’s doomed Brexit deal. A last minute agreement with the European Union over the Northern Ireland backstop failed to convince MPs/
Following the news, Investors have been pouring into the GBP, which saw gains against most major currencies in a busy day of trading.
US Dollar Weakness
The British Pound is currently 1.43 percent higher against the US Dollar, with Cable trading at 1.3260, a rise of 0.0187. The USD found itself drifting lower throughout the North American trading session, pushed lower by soft US data.
The US Labor Department reported its producer price index for final demand which showed an increase 0.1 percent from last month. However, the figures fell short of economists’ forecasts for an increase of 0.2 percent. The yearly PPI eased to a 1.9 percent increase, as per market expectations.
Also released on Wednesday was the core durable goods orders data.
The US Commerce Department reported that core durable goods orders declined 0.1 percent in January, far below analysts’ forecast for a 0.1 percent increase. Some comfort was non-defense capital goods orders excluding aircraft, increasing 0.8 percent in January, easily surpassing market expectations for an increase of 0.2 percent.
The soft data from the world’s largest economy raised market expectations that the Federal Reserve will continue to hold on monetary policy tightening, sending the US Dollar lower.
No-Deal Brexit Vote Failed to Spook Investors
With the March 29th Brexit deadline just around the corner, investors saw today’s key vote as an opportunity for a more stabilising deal being agreed between the UK and the EU.
The UK government motion top prevent a no-deal Brexit passed by 321 votes to 278. However, a rebel amendment to prevent a cliff-edge Brexit passed by 312 votes to 308.
Throughout the chaos of the UK parliament, indices stayed relatively calm. The FTSE 100 edged 0.11 percent higher on the day, closing up 8.04 at 7,159.19.
