Though currently under some pressure, the Pound Sterling had firmed in early European trading ahead of the 2-day debate in the UK Parliament on the subject of Brexit negotiations. Analysts think that Theresa May, the UK’s Prime Minister, will come out relatively unscathed from the scrutiny she is likely to undergo at the hands of the House of Commons. The Prime Minister is hoping to obtain approval to trigger Article 50 which would mean the proceedings for the formal exit of Britain from the European Union, could begin. A week ago, the UK Supreme Court said that that was not a decision she could make unilaterally. What will be crucial for investors is to ascertain the government’s negotiating objectives and the oppositions’ priorities.
As reported at 10:19 am (GMT) in London, the GBP/USD was trading at $1.2439, down 0.41%; the pair earlier hit a session peak of $1.2519 before edging lower, while the daily low was set at $1.2417. Last week, the pair hit a 5-week peak at $1.2674, and for the month of January it is up 1.4%. The EUR/GBP was trading at 0.8613 Pence, a gain of 0.56%, dipping from the session high of 0.8624 Pence.
Bank of England Decision Looms
Traders are also focusing on Thursday when the Bank of England releases its monetary policy decision and inflation forecast. Analysts expect that interest rates will be kept on hold at the current 0.25%, however they do foresee an uptick in economic growth and inflation. Shortly after the Brexit referendum in June 2016, analysts predicted that growth would likely be hit, but that has not yet occurred.