The Pound Moves Higher Against the Euro Despite Brexit Uncertainty

The Pound made a fresh move higher against the Euro on Tuesday, pushing the rate above the key 1.16 level once more. The pair closed at 1.1634, this is the highest closing level in five months. The fact that the Pound has on numerous occasions over the past month managed to go well above 1.1634, but only closed here once, suggests we are in a region of strong resistance that could prevent the Pound from making substantial moves higher. This coincides with the idea that since Prime Minister Boris Johnson pulled his Brexit deal from Parliament and a General Election was called, GBP volatility has plummeted as markets have adopted a wait-and-see stance on the Pound.

GBP/USD is trading below 1.29, as the pair jumped between tepid gains/minor losses on Tuesday and finally settled nearly unchanged. The pair initially got a minor lift and touched an intraday high level 1.2918 following the release of better-than-expected UK services PMI, which unexpectedly recovered back into expansion territory and rose to 50.0 in October from 49.5 previous. Similar to GBP/EUR, the uptick remained capped amid the inherent uncertainty over the actual outcome of the UK election. All eyes look ahead to super Thursday for the Bank of England’s rate decision. The BoE may drop its hawkish bias despite the Brexit calm.

The EUR/USD pair remained under some heavy selling pressure for the second consecutive session on Tuesday and tumbled below the 1.1100 mark, erasing last week's positive move. Growing optimism over a possible US-China trade deal later this month, was seen as one of the key factors exerting pressure on the major. Adding to this, hopes that the Trump administration could roll back some of the tariffs on Chinese goods – as a part of "phase one" deal – boosted the global risk sentiment. The Dollar got an additional boost from a survey on the US service sector, which showed that business sentiment had improved in October from a three-year low in September. The US ISM non-manufacturing sector index bettered market expectations and rose to 54.7 from 52.6 previous. The data came on the back of Friday's strong US jobs report and might have dampened prospects for any further aggressive monetary policy easing by the Fed.

At the time of writing;

GBPUSD – Trading below 1.29 at 1.2883

GBPEUR – Trading above 1.16 at 1.1626

EURUSD – Trading below 1.11 at 1.1079

Special Notes: The figure is based on the live mid-market rate, correct as of 08:00 GMT on 06/11/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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