Pound Extends Losses Ahead of Withdrawal Agreement Vote

Pound Extends Losses Ahead of Withdrawal Agreement Vote


The pound lost ground against other major currencies as the Brexit deadlock continues. The House of Commons will be voting today on only half of Theresa May's Brexit deal. The European Union will postpone the withdrawal date towards May 22nd if the parliament approves the withdrawal agreement which would give May additional time to find a solution for the whole divorce plan. If she fails today in getting her agreement through, the chances of a no-deal Brexit will rise, but also the chances of a longer withdrawal-date extension. The GBPUSD dropped to a low of $1.3010, and the GBPJPY fell to a two-week low of 144.10.


The dollar index which measures the greenback against a basket of major currencies stretched further to reach a fresh two-week high of 97.30. The final reading of the fourth quarter GDP came out lower than expected showing that the US economy grew at a pace of 2.2% versus an expectation of 2.4%. However, the ongoing Brexit uncertainty and sluggish economic outlook in the Eurozone provided support for the dollar which neglected the slightly soft reading. On the other hand, the surge in US Treasury yields backed the dollar. The US 10-Year Treasury yields bounced-off a fifteen-month low of 2.344% to 2.41%. The USDJPY rose to a high of 110.93, and the EURUSD declined to a low of $1.1213.


Metals prices plunged as the dollar soared and Treasury yields rebounded. The price of a gold ounce tumbled to a three-week low of $1286, the silver ounce dropped to a three-month low of $14.87. Meanwhile, the palladium bubble has burst and prices declined to $1334, the lowest since February.


Oil prices recovered from losses caused by President Trump's tweet and settled higher. Trump urged OPEC to increase oil flow as the world markets are fragile and prices are getting too high. The fact that China and the United States resumed trade talks supported prices. Prices are about to post their biggest first-quarter gains since 2009. The West Texas Intermediate crude futures bounced-off a low of $58.19 to trade at a high of $59.75, and Brent futures rose from a low of $66.56 to test a high of $68.26.

Major Economic Events

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UK Parliament vote on Brexit deal




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