26th February 2018 Market Update
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?? GBP – A lack of data released on Friday saw little activity on the rate, however over the weekend the Labour Party said that it wants Britain to seek a new customs agreement with the European Union after Brexit. This puts Prime Minister, Theresa May under pressure as she is also having to deal with the ‘rebels’ in her own Conservative Party, who also want such a deal with the zone after Brexit.
There are no data releases from the UK today. This week, Brexit news will likely dominate as Theresa May presents the cabinet committee’s conclusions to the full Cabinet before travelling to the North East on Friday to give a speech setting out the Government’s plan of what the UK’s future economic partnership with the European Union should look like.
?? EUR – Inflation figures released on Friday in the Eurozone remain fairly lacklustre, although in line with expectations. The low levels could be a sticking point for the ECB not to raise the interest rate anytime soon and could see the euro pressured. In addition, markets are holding back ahead of the Italian national election and the outcome of the German SPD vote on the grand coalition this weekend.
No data to be released today, but markets will focus of ECB President Mario Draghi’s speech at the ECON hearing in Brussels, where he will present the ECB perspective on economic and monetary developments. The issue of low inflation acceleration in the region, which is hampering recovery will likely be scrutinised.
?? USD – The Fed’s monetary policy report released on Friday was seen as a precursor to new Fed Chair Jerome Powell’s testimony this week. However, there was nothing new in the report, thus suggesting that Powell is unlikely to say anything new either.
Today, we have two Fed members speaking on economic and monetary policy, with Bullard speaking at 1pm and Quarles at 8:15pm giving more or an assessment of the current state of the U.S economy.
14:00pm: ECB President Draghi’s Speech.
13:00 Fed’s Bullard Speech.
20:15 Fed’s Quarles Speech.
Summary: The UK PM Theresa May will come under further pressure this week as the Labour Party announced over the weekend that they will want Britain to see a new customs agreement with the European Union after the Brexit. This is likely to be in contrast to the plan that Theresa May is looking to put forward to the full cabinet this week and as such likely that she will not only hit resistance from the Labour Party but also the “rebels” within her own Tory Party that also want a customs agreement.
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