The British pound rose against the euro on Friday as Sterling rebounded from a sharp sell-off the previous day brought about by comments made by the Governor of the Bank of England. Parliament approved UK Prime Minister Boris John’s Brexit bill late on Thursday, paving the way for more upbeat attitudes towards the British currency.
GBP/EUR was higher by 20 pips (0.17%) to 1.1786 as of 1pm GMT, keeping the currency pair in touching distance of its weekly high.
Markets overall were a little more subdued on Friday ahead of the release of the monthly US unemployment report. Traders tend to sit on their hands, with volumes much lower than average before the data is released because of the higher volatility possible afterwards. On Thursday, multiple global stock markets struck record highs including the S&P 500, Australia’s ASX and the Euro Stoxx 600 index.
The pound was able to recoup some of the previous days’ losses when MPs at last voted to pass Boris John’s Brexit bill. The Withdrawal Agreement bill passed in the House of Commons with a majority of 99 votes and will now move to be voted on in the House of Lords next week. The large vote in favour of the bill comes off the back of the large Conservative Party victory in last month’s general election. While Lords might try to attach new amendments to the bill, they will be weary of appearing to frustrate the progress of the legislation. If the Lords do add some amendments, it is likely they would be ultimately rejected by the government anyway, leaving plenty of time of time to meet the January 31 deadline.
Brexit ‘getting done’ on time has been welcomed in currency markets because it removes the uncertainty over Britain’s status in the European Union. However, nerves are still running high that trade talks could hit a snag and bring the uncertainty back later in 2020.
Industrial output data from France, Italy and Spain released on Friday all topped expectations, showing gains over the month. The more upbeat economic data from the European nations put a floor under the limited selling of the euro against the pound.