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Pound set for biggest weekly gain vs euro in 16 months on Brexit hopes

January 18, 2019 at 10:57am

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

The pound weakened on Friday after stellar gains this week that set the currency up for its biggest weekly gain against the euro since September 2017 on growing confidence that a no-deal Brexit can be avoided.

For now, focus turned to January retail sales data out at 0930 GMT for latest clues on the UK economic outlook, which has taken a back seat in recent weeks for traders.

In a tumultuous week for British politics, Prime Minister Theresa May’s Brexit deal suffered a heavy defeat in parliament on Tuesday but she won a subsequent vote of confidence, removing some political uncertainty for now.

Having hit two-month highs on Thursday, sterling drifted lower in early Friday trade.

At 0830 GMT, pound was down a third of a percent at $1.2951 , having touched $1.30 on Thursday.

Against the euro, sterling was down over a third of a percent at 87.99 pence and below two-month peaks hit a day earlier at around 87.65 pence.

“With each tick-up in sterling, it shows that markets are less and less concerned about a no-deal Brexit and less concerned about election risk,” said Sarah Hewin, chief economist for Europe and Americas at Standard Chartered.