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FX round-up: Sterling rises as May's Great Repeal Bill unveiled

By Andrew Schonberg

Date: Friday 31 Mar 2017

FX round-up: Sterling rises as May's Great Repeal Bill unveiled

(ShareCast News) - Sterling put in a positive showing on Thursday as it rose against most major currencies, barring the rand as that unit rose alongside reports South African President Jacob Zuma was considering standing down early.
At 16:46 GMT, sterling was up 0.43% to $1.2487, and up 0.81% to €1.1642. It also advanced on the aussie, loonie, kiwi and yen. The dollar-spot index was up 0.14% to $100.140.

Jasper Lawler, senior market analyst at London Capital Group, said the British currency rose as Prime Minister Theresa May's government unveiled its Great Repeal Bill to repeal the European Communities Act of 1972.

"Sterling has built on the foundation of a relatively stable showing on 'Article 50 Day' when Britain formerly announced its exit from the European Union," said Lawler.

Connor Campbell, financial analyst at Spreadex, observed that the activation of Article 50 failed to spark a major forex catastrophe.

"It appears investors are willing to allow the pound to return to the highs it saw at the start of the week," said Campbell.

It remains clear to all in the market that sterling will be vulnerable to the highs, lows and robust jawboning from politicians on soapboxes both sides of the channel over the coming two years, as the UK's divorce from the EU was negotiated.

"The pound has continued to hold up well despite some belligerence from EU leaders about the terms surrounding the opening of Brexit talks," said Michael Hewson, chief market analyst at CMC Markets UK.

Meantime, the euro lost ground against both sterling and the US dollar. The EURGBP pair touched its lowest since 3 March, while EURUSD dropped for a third consecutive day.

"The euro was under pressure after weaker than expected German inflation data has tempered the idea the European Central Bank could begin taper talk as soon as its next meeting in April," said Lawler in a note.

Turning to the US, the greenback's Thursday afternoon performance was mixed, following on from earlier gains inspired as US Federal Reserve speakers suggested interest rates might need to rise faster than currently expected by the market.

IG market analyst Joshua Mahony said Donald Trump had ensured he remains the man to watch for financial markets, with the US President now taking aim at perceived FX manipulators.

"This feels like yet another example of the US attempting to overstretch its influence on the global stage," said Mahony.

"It is one thing questioning the impartiality of a central bank given domestic political pressures, but having global monetary policy decisions being influenced by the US is a step too far."

In addition to the moves mentioned earlier, the dollar was up against the aussie, kiwi and yen, but down against the loonie and rand.

Looking more closely at the Zuma story, Reuters reported that he was considering stepping down next year, at least a year prior to his presidency ending.

The news agency, in a double-sourced report, said this was after a deal with opponents in his ruling party that would would see controversial Finance Minister Pravin Gordhan leave office now.

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