All change

Pound boosted by Brexit Bill: Part 1

The pound rose to its highest level against the euro in three and a half weeks yesterday, supported by the impending EU Withdrawal Bill which eventually passed in the early hours of this morning by 326 votes to 290. Despite some vehement objections from critics last week, Theresa May stated that the bill offered “certainty and clarity.” The timetable for debating the legislation also passed, guaranteeing 64 hours of debate over eight days. Sterling also hit a five-week high against the US dollar at the end of last week due to manufacturing numbers which were better than expected, and slipped just 0.1% or half a cent yesterday. There is some speculation that the Bank of England Monetary Policy Committee may adopt a more hawkish tone in their announcement on Thursday, which is also bolstering the pound at the moment.

US dollar weathers the storm

The US dollar also had a more positive start to the week than it has known in recent times. The greenback has largely held on to the gains made due to falls in the euro and the yen. In addition, the downgrading of Hurricane Irma to a tropical storm and the lack of action from North Korea both helped to steady the dollar. It rallied 1.4% against the yen overnight, the largest increase since January and in contrast to the 10-month low seen at the end of last week when Hurricane Irma still looked like a more significant threat.

It’s all relative for the euro and Aussie dollar

Both the euro and the Australian dollar fell slightly. The euro lost 0.7% overnight against the US dollar, the Australian dollar was just 0.05% lower as a retreat from the two-year high it achieved on Friday. For the euro, tentative positive indications in the UK and US coupled with the tone of caution from the ECB last week have worked in its rivals’ favour. For the Australian dollar, the strength has largely been relative and seems to have been put in check as other currencies rise.

Political uncertainty keeps the kiwi flightless

While the Australian dollar has been making hay in recent weeks, the New Zealand dollar continues to be weighed down by political uncertainty and over the last month, it has been the worst performing global currency in the G10 complex. The upcoming general election on 23rd September may resolve some of this, but a change in immigration policy proposed by NZ First or banking reform as proposed by Labour could both cause further difficulties.

Loonie marches on

While many other currencies are facing ups and downs caused by everything from political upheaval to extreme weather, the Loonie continues to cement its strong position. The central bank boosted the currency last week with a surprise increase in interest rates and further gains in Canada’s bond yields have ensured that the Canadian dollar also starts the week riding high.