GBP/EUR: Pound At 3 Week High vs. Euro As May Heads Back To Brussels

The pound powered higher for the fourth straight session on Thursday. The pound US dollar exchange rate pushed through the key psychological US$1.30 level, to reach a peak and 6 day high of US$1.3070.

The pound is consolidating those gains in early trade on Friday. Th pound has increased 1.1% across the week to date, paring some of the 2% losses from the start of February.

Pound: Johnson’s cabinet reshuffle resulted in a surprise resignation from Sajid Javid

Boris Johnson’s cabinet reshuffle resulted in a surprise resignation from the Chancellor of the Exchequer, Sajid Javid. Whilst the pound’s initial reaction was to fall, it quickly recouped the losses and surged northwards on the announcement that Sajid Javid’s second in command at the Treasury, Rishi Sunak would be filling his position.

The pound surged because Rishi Sunak, a former hedge fund manager, is considered to be more business friendly, more malleable and more likely to agree to Boris Johnson’s big spending plans. Sajid Javid was more Conservative on fiscal policy and Boris Johnson has made it clear that he is looking to spend hard through Brexit to boost the UK economy.

An expansionary fiscal policy could convince the Bank of England to hold off on interest rate cuts for the next few quarters. As a result, the pound rallied.

Whilst domestic politics are boosting the pound, any gains will be capped by no trade deal Brexit fears.

Dollar traded broadly flat versus its peers after a mixed inflation reading in the previous session

Consumer prices edged up 0.1% month on month in January. This was the smallest increase in inflation in 4 months and was below the 0.2% analysts forecast. Meanwhile on an annual basis the cost of living increased to 2.5%, in line with expectations and above December’s 2.3%. Core inflation which strips out volatile items such as food and fuel was flat at 2.3% for the fifth straight month, slightly ahead of the Fed’s 2% target.

However it is worth keeping in mind that the Fed’s preferred measure of inflation, the PCE is still only at 1.6% increase year on year. With this in mind the Fed are unlikely to move on rates any time soon.

Today is another busy day for US data. US retail sales, industrial production and consumer confidence figures are all due for release. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.