Legally Binding Brexit Changes Agreed to

12th March 2019 Market Update

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🇬🇧 GBP –  Sterling shot up to multi month highs last night following positive news surrounding the outcome of Brexit. Theresa May flew to Strasbourg yesterday evening to meet Claude Juncker and came back with ‘legally binding changes’ to her deal which will hopefully make the deal more palatable to MP in the vote tonight.

Members of parliament have already commented with Labour suggesting that the agreement does not contain anything that the PM promised to parliament. The DUP, Tory sceptics and members of the ERG and have come out said they look forward to the full release of the text and analysis would need to be done first before forming an opinion.

Focus will now turn to the second round of votes on the Brexit deal, where the PM has the momentous task of reversing 230 votes against. Current projections are that she will still lose the vote by 100-150 which will then put the spotlight onto the next 48 hours where parliament will have an opportunity to vote on a ‘deal’ or ‘no deal’ situation and/or will vote on extending article 50.

Away from Brexit, we have GDP figures from the UK forecasted to show growth in January to 0.2%.

🇪🇺 EUR –
There was no significant data of note from the eurozone yesterday. The only thing to mention was German industrial production figures and the German trade balance. Despite these pieces of data being worse than expected they had minimal impact on the euro. Today there is very little data of note from Europe, and the euro will likely be moved in response to any Brexit developments.

🇺🇸 USD –  Yesterday core retail sales and retails came out above expectations from the US yesterday, giving the US dollar some additional strength. Today CPI and core CPI are expected to both come out at 0.2%. with Brexit being the main focus of the market today, this could have a relatively muted impact on the exchange rates. This is followed up by core durable goods and PPI from the US tomorrow.

 

Summary:
GBP: Pound at multi month highs over optimism of a deal
EUR: Euro continues to recover.
USD: Retails Sales Comes in higher.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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