Pound Clings on in Forex Markets as Theresa May Survives Vote

British Prime Minister Theresa May survived a key vote of no confidence in the British parliament yesterday.

Although opposition parties combined to attempt to vote the Prime Minister out of office, members of her own party, along with the Northern Irish Democratic Unionist Party, came together to form a majority to keep her in office.

This comes despite the fact that her proposed Brexit plans were voted down just a day before.

The pound responded well to the fresh reduction in uncertainty, and it rose 0.29% over the course of the day against the euro. It was trading at 88.47 pence per euro at one stage – higher than the position of 88.65 it held before the key developments took place.

However, there are likely to be tough times ahead given that a Brexit deal is not yet finalised.

Elsewhere, the euro suffered as poor economic data covering the eurozone continued to dominate the headlines.

In the EUR/USD pair, the euro was down 0.22% compared to the dollar – registering at both $1.139 and $1.138 over the course of the day. The gloomy performance of the euro comes in the wake of poor economic performance statistics in Germany, although the country did manage to avoid going into recession.

With just a couple of days left to go in the trading week, there are still a few milestones to look out for.

Today (Thursday) sees a speech from Randal Quarles, a member of the US Federal Reserve’s Board of Governors and its Vice Chair for Supervision. He will speak at 3.45pm GMT.

Japanese data releases are expected at 11.30pm GMT. The National Consumer Price Index excluding fresh food and covering the month of December will be out, and year on year it is expected to drop from 0.9% to 0.8%.

On Friday, more Japanese data releases will come early in the morning. Industrial production figures for November are expected at 4.30am GMT, for example, with November’s position expected to stay the same month on month at -1.1%.

British retail sales data for December is due at 9.30am GMT. Year on year, it is forecast that this will also hold steady at 3.6%, although the figures excluding fuel are expected to show a rise from 3.8% to 3.9%.

Canadian consumer price index figures will come out at 1.30pm GMT. Month on month, December’s figures are due to remain at -0.4%, while year on year they’re forecast to stay at 1.7%.

Another speech from a major central banker is expected in the afternoon. John C. Williams, who is the President of the Federal Reserve Bank of New York, will speak at 2.05pm GMT.

Looking ahead briefly to next week, dollar activity may be slow on Monday as banks close for the Martin Luther King Jr. Day.

Chinese gross domestic product data for the fourth quarter of the year is due out at 2am GMT, and all eyes are expected to watch it given the country’s economic woes over the last year or so. Year on year, it is forecast to show a slight drop from 6.5% to 6.4%.

Meanwhile, Tuesday sees the beginning of the World Economic Forum in Davos.