Sterling appears to be regaining momentum following the House of Lords decision to pass the Brexit Bill, providing government with the legal path for triggering Article 50 next week. A string of economic data this morning proved positive for post-Brexit Britain, as unemployment rates fell to 4.7% from 4.8%.
Furthermore, unemployment claims fell 11,300 for the month of January, despite concerns that Brexit would continue to dampen employment and result in major cut backs in the finance sector.
GBP investors found support in the latest data and have been provided further clarity on the timing of Article 50, which is now expected as early as next week.
Near term volatility for GBP/EUR and GBP/USD
The next 12 hours will be crucial for GBP/EUR and GBP/USD with two major events emerging overnight. The FED’s interest rate decision will be expected at 6pm GMT, and the Dutch election results due in the early hours of Thursday morning.
It is widely expected that FOMC members will vote in favour of a rate hike by 25 basis points, as such the Pound may lose ground against the US Dollar when markets reopen for trading tomorrow morning.
The Dutch elections have created quite a stir in recent weeks, notably the far-right political figure Geert Wilders, who up to now has shown to be leading in most polls. His anti-establishment rhetoric has markets worried that another country could leave the EU.
GBP/EUR may edge higher if Wilder’s wins by a clear majority, when markets set their eyes on the upcoming French elections and the woes of a potential Marine Le Pen victory.