18th March 2019 Market Update
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?? GBP – Sterling had a volatile week following a string of Brexit votes last week. On Tuesday we saw, unsurprisingly, Theresa May’s deal get voted down for the second time; Wednesday we saw Parliament reject a no deal Brexit and on Thursday, parliament voted to show their support for a delay in Article 50 being triggered. Sterling finished the week broadly higher and remains near multi month highs against the US dollar (8 month high) and euro (21 month high).
This week, Brexit will be in focus again as the PM will possibly attempt to hold a third vote on her Brexit deal on Tuesday or Wednesday evening, if she believes she can win. May is currently attempting to court members of the DUP in hope that she can secure support for her deal. Failure in order to do so, could see Jeremy Corbyn trigger a confidence vote in May’s government.
Away from Brexit there is deluge of economic data out this week also. On Tuesday we have the latest job and earning figures, Wednesday will see the release of February’s inflation data, Thursday will see retail sales and the BoE’s interest rate decision and Friday we have the Bank quarterly bulletin.
So long as the certainty of avoiding a no deal Brexit remains then sterling should remain well supported near these highs but any threat to the current political spectrum could threaten the position of the pound.
?? EUR – The euro recovered over the course of last week versus the US dollar, rising back up to the levels last seen on the 5th March. The euro suffered significant losses during the last ECB monetary policy meeting, where the bank announced another series of long-term loans to bank to support stagnant growth in the eurozone. Data on Friday saw inflation climb to 1.5%.
The only major news out this week is on Friday with Markit manufacturing and services figures.
?? USD – The dollar had a disappointing week, finishing broadly lower across the board following softer than expected economic data which is now pointing to an all but certainty that the Fed will not raise interest rates this Wednesday – interest rates currently stand at 2.5%
Markets are expecting a dovish stance from Fed Chair Jerome Powell, with focus being on revised economic forecasts and whether the Bank will continue to sell off bonds at the same pace as before.
The only data of significance will be Markit manufacturing and services figures on Friday expected to show a slight expansion in both sectors.
GBP: Will the PM hold a third vote on her Brexit Deal
EUR: Inflation rises in February
USD: Fed in Focus ahead of Bank statement on Wednesday
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