Wed, July 13, 2016
After weeks of turmoil, an air of stability is returning to U.K. politics, and the Pound is feeling the benefit.
Sterling is headed for its longest winning streak in two months before Theresa May takes over as prime minister later today, ending a period of instability that has lasted since the U.K. voted to leave the European Union.
Since the June 23 vote, sterling fell to its worst day on record, the Pound tumbled to the lowest level since 1985 last week, before gaining some of that ground as it became clear a new leader would take power earlier than previously thought. It’s still 11 % lower since the nation opted for Brexit.
May’s succession is seen as positive for the Pound due to speculation she may take a less hard line, and slower, approach to the exit negotiations than her rivals. May, who backed the “Remain” side in the referendum, said on Monday that will wait until 2017 to trigger Article 50 of the Lisbon Treaty, which starts the potentially two-year process for withdrawing. The outgoing Home Secretary has also indicated that the formation of a new Brexit department with a secretary of state at its helm will be one of her first announcements.
It is expected that it will take a very long time to see what Brexit looks like. There’s also some sense that a calm head is in charge in the U.K. rather than a firebrand Leaver.
The Pound strengthened as much as 0.7% to $1.3338, the highest level since July 4, and was up 0.1% at $1.3266 this afternoon. Sterling is set for a fourth day of gains, the longest rally since May 19.
A potential stumbling block for the Pound’s recovery is tomorrow’s Bank rate decision, the first since the vote. There is a big chance of a rate.
Data to look out today.
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| Day | Time | Currency | Event |
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| Wed | 08:30 | GBP | GBP Bank of England Credit Conditions & Bank Liabilities Surveys | Wed | 09:00 | EUR | EUR Euro-Zone Industrial Production s.a. (MoM) | Wed | 09:00 | EUR | EUR Euro-Zone Industrial Production w.d.a. (YoY) | Wed | 11:00 | USD | USD MBA Mortgage Applications | Wed | 12:30 | USD | USD Import Price Index (MoM) | Wed | 12:30 | USD | USD Import Price Index (YoY) | Wed | 13:00 | USD | USD Fed's Kaplan speaks to World Affairs Council of Houston | Wed | 14:30 | USD | USD DOE U.S. Distillate Inventory | Wed | 14:30 | USD | USD DOE Cushing OK Crude Inventory | Wed | 14:30 | USD | USD DOE U.S. Crude Oil Inventories | Wed | 14:30 | USD | USD DOE U.S. Gasoline Inventories | Wed | 17:00 | USD | U.S. to Sell 30-Year Bonds Reopening | Wed | 18:00 | USD | USD U.S. Federal Reserve Releases Beige Book | Wed | 18:00 | USD | USD Monthly Budget Statement | Wed | 22:00 | USD | USD Fed's Harker speaks in Philadelphia | Wed | 23:01 | GBP | GBP RICS House Price Balance |
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