GBP/USD continues to rally this week. In Wednesday’s North American session, the pair is trading at 1.3308, up 0.42% on the day. The streaking pound touched a high of 1.3350 earlier on Wednesday, its highest level since July. In economic news, U.S. data was mixed. Factory orders were up 0.1%, well off the forecast of 1.5%. Pending Home Sales sparkled with a gain of 4.6%, its highest gain in two years. The U.K. will release GfK Consumer Confidence, with the markets projecting a weak reading of -15 points. On Thursday, the U.S. releases Advance GDP and unemployment claims.
Prime Minister May’s dramatic announcement of another parliamentary vote on Brexit has galvanized the pound, which has climbed 2.0% this week. May said that parliament would vote on the government’s withdrawal agreement no later than March 12. If lawmakers reject that proposal, they will vote the next day on two separate proposals – one on a no-deal Brexit, and the second on requesting the EU to extend Article 50 and delay Brexit past March 29. Investors are confident that this makes a no-deal scenario even more unlikely, which has resulted in sharp gains for the pound.
There were no surprises from Powell’s testimony before a senate committee on Tuesday, as Powell preached patience with regard to changes in interest rates. Powell stated that the Fed was in “no rush to make a judgment” and made reference to “conflicting signals in the economy”. The labor picture remains bright, with strong hiring and low unemployment. At the same time, consumer spending and housing data have been soft. The markets are expecting the Fed to remain on the sidelines in May and June, meaning that the first hike of 2019 will not come before the second half of the year.
